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Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: "Sifert, Bryan" <bryan.sifert@csfb.com< X-To: undisclosed-recipients:, X-cc: X-bcc: X-Folder: \Jeff_Dasovich_Oct2001\Notes Folders\All documents X-Origin: DASOVICH-J X-FileName: jdasovic.nsf Good Morning, Attached, please find the latest issue of our Independent Power Weekly. <<IPW073001.pdf<< Also note that on September 10 and 11, CSFB will host a Power Generation Supply Chain Conference at the Plaza Hotel in New York City. This event is designed to provide investors with a wholistic perspective on all aspects of the sector-from coal and natural gas companies, to equipment and construction service providers, to the power producers themselves. Please contact us if you would like additional information. Summary: 1. IPPs Fall 0.9% Last week our IPP composite traded off 0.9%, slightly underperforming both the NASDAQ (0.0%) and the S&P 500 (-0.4%) Reliant Resources was the strongest performer, rising 6.9%. NRG Energy was the weakest, declining 10%. 2. One of the Most Volatile Weeks of the Year In terms of stock price performance, last week was one of the most volatile weeks of the year for the Independent Power Producers. On Monday (7/23) and Tuesday (7/24) the group declined by over 10% before staging a dramatic recovery to end the week barely unchanged. We attribute the week's initial downturn to concerns early in the week surrounding "soft" power market conditions. The recovery during the second half of the week reflected a number of factors, including: 1) Analysis indicates that power markets have been more stable than generally believed; 2) Earnings results continue to exceed expectations; 3) Depressed valuations provide a cushion for stock prices; and, 4) On 7/25 the FERC issued a favorable order on generator refunds. 3. Credit Spreads Continue to Improve Importantly, while our IPP equity composite has traded off more than 10% over the last few weeks, IPP credit spreads continue to tighten. For example, while Calpine shares have traded off 11% since July 6, the spreads on CPN's 10 year 8.5% notes due 2011 have actually tightened by about 40 basis points. We regard this movement as bullish from an equity perspective. 4. Q2 Earnings Reported for AES, CPN, NRG and PPL Last week second quarter earnings results were reported by AES, Calpine, NRG Energy and PPL. Upside surprises were reported by AES, CPN, and NRG. Versus expectations, CPN's results were the strongest coming in 30% above our estimate. While AES's results were 14% above our estimate, we reduced our 2001 full-year forecast owing to currency weakness in Brazil. 5. Looking Ahead: Q2 Results Expected from BKH, CNL, DPL, ETR, MIR and ORN This week we await earnings reports from Black Hills, Cleco, DPL, Entergy, Mirant and Orion Power. We do not expect any major upside or downside surprises from this group. In particular, our estimates for BKH, ETR and MIR are in-line with company guidance that had been publicly reaffirmed over the last few weeks. Regards, Neil Stein 212/325-4217 Bryan Sifert 212/325-3906 This message is for the named person's use only. It may contain confidential, proprietary or legally privileged information. No confidentiality or privilege is waived or lost by any mistransmission. If you receive this message in error, please immediately delete it and all copies of it from your system, destroy any hard copies of it and notify the sender. You must not, directly or indirectly, use, disclose, distribute, print, or copy any part of this message if you are not the intended recipient. CREDIT SUISSE GROUP and each of its subsidiaries each reserve the right to monitor all e-mail communications through its networks. Any views expressed in this message are those of the individual sender, except where the message states otherwise and the sender is authorised to state them to be the views of any such entity. Unless otherwise stated, any pricing information given in this message is indicative only, is subject to change and does not constitute an offer to deal at any price quoted. Any reference to the terms of executed transactions should be treated as preliminary only and subject to our formal written confirmation. - IPW073001.pdf
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