Giant utility NextEra Energy (NYSE:NEE) has priced a new issue of baby bonds with a fixed coupon of 5.65%. The issue matures 3/1/2079 and there will be an optional redemption period beginning 6/15/2024.
This is substantially higher than would appear to be necessary and is much higher than our guesstimated coupon.
The company has 3 other baby bonds outstanding with coupons of 5%, 5.125% and 5.25%. The 5.25% issue was trading at $25.50 earlier this week before this new issue was announced at which point it tumbled–as now it will compete against a nearly perfectly matched issue.
The new issue be 24 million shares with another 3.6 available for over allotment. Interest will be paid quarterly and the interest payments will NOT be qualified income.
As we noted yesterday this utility issue will have the ability to defer interest payments numerous times for periods of up to 10 years without it being in default.
The issue will not trade on the OTC Grey Market since it is a debt issue.
The ticker has not been announced as of now.