CMS Energy Prices Baby Bonds — UPDATE

As we all expected the new CMS Energy (NYSE:CMS) baby bonds have priced with a fixed coupon of 5.875%.

The issue is pretty huge, with $630,000,000 in bonds offered. They will mature 3/1/2079 (also where we guessed) and will pay the normal quarterly interest payments. Interest payments are not qualified for preferential tax treatment.

The issue has an early redemption available to the company starting 3/1/2024.

The company is using the proceeds to repay outstanding term loans.

Shares are rated Baa2 by Moodys and BBB- by Standard and Poors

The pricing term sheet can be found here.

Shares will trade on the NYSE, but the ticker is not yet assigned (I would guess CMSB or CMSD).

UPDATE-most utility baby bonds contain a ability to ‘defer’ interest payments for 1 or more periods and this issue can defer once or more, for up to 40 consecutive quarterly periods (10 years) without causing a default. The deferral may not go past the maturity date and the company must pay interest on the deferral amount.

We have not witnessed one of these deferrals–whether it has ever happened we don’t know.

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