Entergy Texas Prices Preferred Issue

Entergy Texas (NYSE:ETR) has priced their new perpetual preferred stock.

The fixed rate coupon will be 5.375%. The issue is small (curiously small) at only 1.4 million shares. This small issue announcement makes me wonder if there is a typo–by a factor of 10.

The issues is rated Ba2 by Moodys and BBB- by Standard and Poors–barely investment grade.

The pricing term sheet is here.

As of moments ago the OTC temporary ticker had not yet been announced.

12 thoughts on “Entergy Texas Prices Preferred Issue”

  1. What is the world coming to? A sub investment grade perp at 5.375 and the folks are tripping over themselves to buy it.

    I’m sticking to Canadians and STT-C at 25.10 or less.

  2. Can anyone tell me why EZT took such a hit (-5%) today? Did people confuse the new Preferred stock with this? EZT is a 1st Mortgage Bond.

    1. I would expect the pref to yield 10% above a bond, maybe more in the case of a mortgage bond. The 5.375% on the new pref said the bond was overpriced. So it dropped.

    2. speculation that the proceeds from the preferred will pay off the highest interest rate bond.

  3. 35 million?
    that is a rounding error for them, and not near big enough to redeem any of the debt outstanding.
    Unless it is being used in conjunction with the proceeds from this debt issuance, of which they have 200 million that wasn’t accounted for.
    In January 2019, Entergy Texas issued $300 million of 4.0% Series mortgage bonds due March 2029 and $400 million of 4.5% Series mortgage bonds due March 2039. Entergy Texas used the proceeds to repay, at maturity, its $500 million of 7.125% Series mortgage bonds due February 2019 and for general corporate purposes.

    That rating just above junk must be the reason they couldn’t sell any more.

    1. Justin, Spire pushed out a $250 million issue with a lower rating. This issue would get gobbled up. Unfortunately the yield seems appropriate. I just got off course and havent looked but I read a few posts. My initial thought is this preferred serves no purpose to redeem a debt issue of any type. If it is, it is the first time under Entergys guidance I have ever seen. Historically Entergy has had their subsidiaries redeem their old capital stock preferreds and be replaced with debt. Not the other way around. But this is just first initial thought. I am curious about the small issuance size though myself, too.

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