Utility NiSource (NYSE:NI) has priced their new Fixed-Rate Reset preferred shares with an initial coupon of 6.50%.
The issue is rated low investment grade by S&P at BBB- and is rated high junk by Moodys and Fitch at Ba1 and BB+ respectively.
The issue will carry the 6.50% fixed rate until 3/15/2024. After this time it will float at the 5 year U.S. Treasury plus a spread of 3.632% until 3/15/2044 after which it will be reset at the 5 year U.S. Treasury plus a spread of 3.632% plus 1% (total of 4.632%).
These terms are somewhat better than I had expected and a 6.50% coupon for a few years from a utility is tempting–in spite of their troubles I mention below. Given the size of this issue we will watch trading on the OTC Grey market for a few days before deciding if we want a piece of this one.
This will be a large issue of 20 million shares.
The issue will trade OTC Grey market on Thursday under the temporary ticker of NISOP. The permanent ticker will be NI-B when it begins to trade on the NYSE.
CAUTION–Columbia Gas (a division of NI) was the owner of the natural gas service which exploded in Massachusetts in September. This event has cost the company near $1 billion to date, although insurance is likely to cover much of this cost. We make this notation for potential investors.