Southern Company Affiliate Prices Green Bonds Worth $1B
Southern Power – a subsidiary of electric utility firm Southern Company SO – has announced the pricing of Green Bonds worth $1 billion.
The bonds comprise a $500 million senior note offering with an interest rate of 4.15%, due to mature on Dec 1, 2015. Another $500 million senior note offering with an interest rate of 1.85% and slated to mature on Dec 1, 2017 also forms part of the bonds.
These senior notes are unsecured obligations of Southern Power. The offering is expected to close on Nov 17, subject to customary closing conditions.
Green Bonds are debt instruments that generate funds from the market to be used in projects that have positive environmental effects.
Southern added that an amount equivalent to the proceeds of the offering will be used for renewable energy generation projects. The funds would be used for developing solar and wind power generation facilities in the U.S.
Southern Company is one of the largest generators of electricity in the nation, serving both regulated and competitive markets across the southeastern U.S. It dominates the power business across the southeastern region. With good rate base growth and constructive regulation, we expect the firm to generate steady earnings and dividend growth in the coming years through its long-term power contracts.
However, the challenging economic environment and delays associated with existing construction projects may hamper Southern Company's results in the next few quarters.
Currently, Southern Company carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the Utilities-Power space are Huaneng Power International, Inc. HNP, Korea Electric Power Corp. KEP and CMS Energy Corp. CMS. While Huaneng Power and Korea Electric Power sport a Zacks Rank #1 (Strong Buy), CMS Energy holds a Zacks Rank #2 (Buy).
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