No. of Recommendations: 4
I watch long dated Pacificorp and BHE bonds. Prior to the wildfires in 2020, long dated (2050+) BHE and sub bonds traded at 3-4% yield. Fed fund rate was 1.5-2.5%, so there was premium of about 1.5%.
Now long dated BHE/Pacifcorp bonds yield 5.5-6%. Fed funds rate 3.5-4.25%, so the premium has maybe widened - 1.75-2.5%
My recollection is that corporate term premiums have narrowed over the last year. So maybe there's some add risk.
Maybe my logic or math is off.
WA, OR, and WY PUCs have for the most part approved Pacificorp rate increases (including costs for wildfire mitigation etc). So it's possible that Buffett's letter admonishing rate regulators has done its job.
