CMS Energy to Sell Baby Bonds

Michigan based utility CMS Energy (NYSE:CMS) has filed to offer a new issue of $25 baby bonds. No details have been released yet, but we would expect this issue to have a very long dated maturity–2079.

The preliminary information on the new issue can be found here.

The company has 2 other baby bonds currently outstanding. CMSA and CMSC with coupons of 5.625% and 5.875% respectively. These issues are both trading right around $25 and so we expect the new issue to be priced accordingly. The issue will be rated investment grade.

13 thoughts on “CMS Energy to Sell Baby Bonds”

  1. It is possible to explore beyond the boundaries of our known small universe of US located BBs and Prefs. AND hit paydirt. I had been digging in the wrong places, but was pointed over by a contributor here to where the real lode lay! In other words was given a finger! (HA)
    Sometimes the material is buried under 15 clicks and 3 or 4 other sites for pieces of info that eventually fit together. I think having QO offline recently made me look afield further. I have done no screening but have the pattern to follow the gold-vein now. I encourage everyone to dig and dig and make it fun. My wife thinks I am nuts for doing a little woohoo-jig over here. Happy Hunting! PS: now I need some lower prices.

    1. Joel, lol, that is half the fun…I have people emailing me needing info because Quantum is down…I dont even really ever use it except for cursory stuff. Every since I dug into the bowels of internet a few years ago to figure out the origin of DMRRP and find its prospectus (it was issued in 1863) everything else has been a piece of cake. Well I havent tried to research Arabic preferreds in original source material yet so it might not all be a piece of cake, ha.

    2. Joel A -my wife thinks I’m nuts too for all my reading, writing etc. Like Grid says the hunt is at least half the fun–but he doesn’t have a wife so he can chase these things night and day.

      1. Tim, I have a long time girlfriend of 12 years so it kinda feels like marriage. Except she has to work so I get a lot of study time during week, lol. This CMS baby bond holds no allure for me. These Canadian resets have high quality, QDI, and low resets for future yield protection which appeal personally more to me. With all the utes I own now I pretty much have from Canada to the Carribean and Hawaii to New York covered for now.

      2. Tim, I started buying back the NI-B I sold at $26.95 last week, buying back part of them today at $26.45. I never fully got invested the money I recieved from selling so I bought some back today. Even managed to get a bit more of CNIGP today at $21.65. I have over a 1000 shares of this. A decent amount since insiders and Gabelli combined have themselves over 200, 000 shares of the ~ 245,000 shares outstanding.

        1. Gridbird, I looked at CNIGP (and CNIGO) a few weeks ago when I saw you mention it, but I think the YTM was around 4% and of course pretty hard to buy. I tried for a couple weeks and gave up.

          1. Alan, the yield of the issue isnt of importance for me. Its the sneaky little fine print they added a year ago. When they gave the common stock split of 1.2 shares to “increase float liquidity” they also increased the CNIGP conversion from 1-1 to 1- 1.2 without any dilution. This was a total bogus reason to benefit people owning CNIGP. Increasing the tradeable float 20% was meaningless because only about a dozen people own about 75% of the float and they are never selling; so increasing the float accomplished nothing. Anyways, anytime the common stock goes up a $1, the value of CNIGP will automatically increase $1.2. So you get 20% more bang with higher yield, plus an insurance 2026 redemption at par, if you never exercise the conversion. The conversion is only shareholder optional not company optional. So its a voluntary conversion of 1.2 with a 2026 par put. Based on recent trading it largely is instantly value accretive. Most conversions are traditionally way out of the money when issued or have a fly blind mandatory conversion.
            With a 68 yr old CEO and Gabelli basically controlling the company and about half the shares, this little company has valuable assets including a direct pipeline out of Marcellus. This is more of a 5 year “stock hold” than a true income play for me.
            Only about 18% of the CNIGP float (~44,000 shares) is even remotely available to buy so I get when I can.

            1. Thanks Gridbird! I should have known there was a twist that I missed or you wouldn’t have been that high on them. I didn’t read the prospectus close enough. Does the same think apply to CNIGO?

              1. Alan, No, the allure of CNIGO is it is a short 2023 term dated vanilla 6% par issue. I have owned up to 2000 shares of it but presently am out. I buy when they come available in 25s and dump when they are near 27 and above. It has been an excellent trading vessel, but hard to buy. The CNIGP is a play on the common stock. Revenues were up 14% last year which is very good for a Ute. Hopefully the regulated profits will follow as expenses settle down over time.

              2. Alan, remember in case you ever get interested, CNIGP is a par $20.75 issue. So if you want the maturity put to have any value one cant go real far above par. Otherwise you are totally in bed with hope of common stock appreciation to make the money.

                1. Thanks for all the information, Gridbird. I am not sure I will try to accumulate any CNIGP as I know who I would be competing against 🙂 and I would lose.

  2. With a maturity date of 2079 I have no interest in these new baby bonds.
    The Fidus offering @ 6% and 2024 maturity is much more appealing.

  3. Given JPM recent issue at 6%, I would imagine that’s around where the coupon will be. Interested at Less than par primarily because I favor utility companies

Leave a Reply

Your email address will not be published.