CreditSights on June 14 upgraded Calpine Corp. unsecured bonds to "outperform" from "market perform" based on the strong outlook for earnings and cash from Texas power prices.

CreditSights analysts noted this is their second upgrade of Calpine bonds in two months.

"Our upgrade is once again owing to the strong outlook for earnings and cash flows in [Texas], which continues to improve and a heat wave in late May gave us a taste of what is to come in July and August," CreditSights analysts wrote.

CreditSights believes that the "spiking Texas power prices" could add $500 million to $600 million of EBITDA to the newly private, Houston-headquartered merchant generator's approximately $1.9 billion EBITDA run rate.

In March, a consortium of private equity investors led by Energy Capital Partners LLC, Access Industries Inc. and Canada Pension Plan Investment Board completed a $5.6 billion buyout of Calpine.

"We see the improved profit outlook as taking significant pressure off the buyers to engage in actions that are unfriendly to creditors such as large-scale asset sales and/or layering in project debt with proceeds in either scenario being sent up to the buyers," the analysts added.