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Better Off Without It

24 November 2017 by lberuti

The week developed in understandably low volumes given the US holidays, but energy got some decent airtime in Europe. On the one hand, CNALN’s ( Centrica Plc ) risk premium was sent to its widest levels since June after it warned on profits on Thursday. On the other hand, the bearish momemtun on EDF’s ( Electricite de France SA ) 5-year CDS appeared to stall a little bit. Mr Hulot, the French minister for the ecological transition, wondered whether the structure of EDF was the best possible to face the challenges of the 21st century. Investors interpreted it as a sign that the French government could be considering spinning off the nuclear activities – which are potentially a source of large liability - into a standalone unit. The operation would be reminiscent of the move undertaken by RWE in 2016. At the time, the German electricity company, facing the programmed exit of nuclear energy in its country, decided to create a new quoted entity, Innogy, to take care of electricity distribution and renewable energies.