Edison International's SCE Preferreds: High Yields From A Special Situation

(12min)

Summary

  • Southern California Edison and Edison International preferreds are undervalued due to wildfire liability uncertainties, but offer upside as issues resolve.
  • Liability for the LA wildfires is likely capped at $1B due to AB 1054, with the wildfire fund covering additional costs.
  • SCE preferreds are structurally senior to EIX preferreds, offering safer investment options with attractive yields and potential for full recovery in bankruptcy.
  • Despite uncertainties, SCE/EIX preferreds are expected to reach par, providing attractive yields to call (YTC) as EIX regains access to low-cost capital.

Electricity pilon

D-Keine

Guest Post from Landlord Investor.

Southern California Edison/Edison International (SCE/EIX) is a $21B market cap regulated utility that serves the Southern California market. Edison International (NYSE:EIX) is the holding company, and its primary operating subsidiary is Southern

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Analyst’s Disclosure: I/we have a beneficial long position in the shares of SCE.PR.J, SCE.PR.K either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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