NiSource Issues $750M Notes

Zacks

Diversified utility NiSource Inc. (NI) announced that its finance subsidiary NiSource Finance Corp. has sold $750 million notes in two tranches. NiSource’s unit intends to utilize the proceeds to meet its short-term obligation and for general corporate purposes.

The first series consists of $250 million senior notes yielding 3.85% interest per year and maturing on February 15, 2023, while the second series consists of $500 million senior notes yielding 5.25% interest per year and maturing on February 15, 2043. Fitch rating agency assigned a “BBB –“ rating with a Stable outlook for the issue.

The company issues notes from time to time, to meet its financial obligations. Earlier, in November 2011, the company issued $500 million senior notesin two tranches of $250 million each. The first series of notes bears a coupon rate of 4.45% maturing on December 1, 2021 while the second series of notes bears a coupon rate of 5.80% maturing on February 1, 2042.The proceeds from the issue were utilized to fund pension contribution and partially fund the cash tender offer of two series of its outstanding debt.

NiSource’s long-term debts as of March 31, 2012, were $5.84 billion versus $6.27 billion as of December 31, 2011. The long- term debt-to-equity ratio at the end of the first quarter 2012 was 58.2%, down from 60.0% at the end of 2011. However, with the latest issue of the new notes the long-term debt to equity ratio will increase to 61%.

NISource’s first quarter earnings of 76 cents per share were ahead of our estimate and the year-ago results. The company expects earnings per share for 2012 to range between $1.40 and $1.50.

The Zacks Consensus Estimates for second-quarter 2012 and fiscal 2012 are currently at 20 cents per share and $1.45 per share, respectively.

NiSource Inc. currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. The operating margin of the company lagged its peers Dominion Resources Inc. (D) and Duke Energy Corporation (DUK) in the trailing twelve months.

Merrillville, Indiana based NiSource is an energy holding company whose subsidiaries provide natural gas, electricity and other products and services in the U.S. Its operating subsidiaries deliver energy to customers within the high-demand energy corridor stretching from the Gulf Coast through the Midwest to New England.

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