Giant utility NextEra Energy (NEE) has announced they will be selling a new issue of $25 Junior Subordinated Notes. These notes will have a maturity way out in 2085.
As is pretty typical of theses types of notes the company will have the option to defer interest payments on one or more occasions for up to 10 consecutive years.
NEE has one other outstanding baby bond–although over the years they have had many, but most of them have been redeemed.
The preliminary prospectus can be read here.
Thanks to J for being on this one and for Jerrymac for chiming in with yield talk of 6.625% and If you prefer for jumping in with the announcement.
Dang, this is not a preferred stock.
The junior bonds are so hard to buy pre-IPO and usually I can’t find them in Fidelity, Schwab and E*trade (rarely).
This NEE senior bond e.g. https://www.finra.org/finra-data/fixed-income/bond?cusip=65339KDM9&bondType=CA are has coupon of 5.9% with shorter maturity than 2085 with current yield over 6.0% and can’t defer interest payment unless in financial distress.
I briefly looked at duke and others., Mid 6 is a respectable level in utility land save for so cal Edison….,Their other new pfd is a 6 cy.
The equivalent NEE capital should be the newly issued $100 issue. 6.5% fixed rate reset issue.
https://www.finra.org/finra-data/fixed-income/bond?symbol=NEE5998544&bondType=CA
StevaA – 65339KDF4 is a reset and has a reset floor of 6.5%, so it is superior as it will outperform if rates increase, i.e. the coupon could be much higher than 6.5%. My understanding is that the new $25 issue will be fixed.
http://pdf.secdatabase.com/182/0001193125-25-020141.pdf
Agree …there’s also cusip 302570ax4 trading ~93 with current yield north of 7% (currently floating 3m sofr plus 2.38)
Maine – Thanks. Yes, I purchased this 6.5% $100 issue. Same coupon as new issue but a better issue because it cannot go below 6.5% but will reset above if inflation long term is a problem
It’s a big deal size wise. Spigot open
It’s a big deal size wise