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North American Investor-Owned Utilities' Hybrid Issuance Hits New Record

This report does not constitute a rating action.

Hybrid issuance sets a record in 2024 at the expense of meaningful common equity issuance.   Hybrid security issuance to date in 2024 has surpassed $14 billion, which was the previous record set for the industry in 2019. Given issuance trends, we assume total hybrid issuance will exceed $20 billion in 2024. We view hybrid securities as more credit supportive than debt but less credit supportive than common equity. S&P Global Ratings generally assesses hybrid securities as having high (100%) or intermediate (50%) equity content.

To date, the industry's common equity issuance in 2024 remains well below our expectations, reflecting between $1 billion and $2 billion issued. This compares negatively with 2023, when the industry raised only about $8 billion of new common equity, and these issuance levels are meager in comparison to the industry's historical average run rate of about $20 billion annually between 2018 and 2020. Therefore, without significant common equity issuance, we expect the industry's financial measures and credit quality will continue to be pressured.

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Primary Credit Analyst:William Hernandez, Dallas + 1 (214) 765-5877;
william.hernandez@spglobal.com
Secondary Contact:Gabe Grosberg, New York + 1 (212) 438 6043;
gabe.grosberg@spglobal.com

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