Renewable energy firms have come under pressure in recent days on the back of surging bond yields.
Having been tipped to benefit from central bank rate cutting, the prospect of higher debt costs has threatened to take its toll on the capital-intensive industry.
Indeed, The Renewables Infrastructure Group Ltd faced a roughly 6% drop in its share price on the back of last week’s steepening bond market sell-off.
A string of factors had sparked the sell-off, which has seen long-term UK gilt yields hit their highest since 1998, including jitters around government spending plans and wider fears of inflationary pressure under incoming US president Donald Trump.
Within the renewables sector, companies rely heavily on upfront investment, leaving project margins under threat from higher borrowing costs.
Valuations also depend on future cash flows, meaning growing borrowing costs prompt investors to apply steeper discounts on such stocks.
Rival sector players, such as SSE PLC (LSE:SSE) and RWE (ETR:RWE) AG, also tumbled over the course of last week in response to the global jump in gilt yields.
Monday has brought a slight rebound for both, alongside Renewables Infrastructure Group, though analysts have warned that gilt yields may have a way yet to go before peaking.