Summary
Sempra (SRE) has successfully closed a public offering and sale of $800 million in aggregate principal amount of its 6.375% Fixed-to-Fixed Reset Rate Junior Subordinated Notes due 2056. The net proceeds from this issuance, approximately $792 million after underwriting discounts, are intended to fund a portion of the redemption of its outstanding 4.875% Series C Preferred Stock, pending board approval. This strategic move signals a potential shift in Sempra's capital structure, likely aimed at optimizing its cost of capital or deleveraging specific equity tranches. The new notes carry a fixed-rate coupon of 6.375% until April 1, 2031, after which the rate will reset based on the Five-year U.S. Treasury Rate plus a spread of 2.632%, with a floor of 6.375%. The notes also feature optional interest payment deferral capabilities for Sempra and redemption options for the company. Investors should note the junior subordinated nature of these notes, which implies a higher risk profile compared to senior debt.
Key Highlights
- 1Sempra closed an $800 million offering of 6.375% Fixed-to-Fixed Reset Rate Junior Subordinated Notes due 2056.
- 2Net proceeds of approximately $792 million will be used to partially fund the redemption of Series C Preferred Stock.
- 3The interest rate is fixed at 6.375% until April 1, 2031, then resets based on Treasury rates plus a spread.
- 4The reset rate has a floor of 6.375%, providing a minimum yield.
- 5The company has the option to defer interest payments on these notes.
- 6Sempra retains the option to redeem the notes under specific conditions, including after April 1, 2031.
- 7The offering was registered under an effective shelf registration statement on Form S-3.