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Alliant Energy's (LNT) Arm to Refinance, Price Debt Offering

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Alliant Energy Corporation LNT announced that its unit Interstate Power and Light Company (“IPL”) has priced $300 million of 3.100% senior debentures due in 2051. The proceeds from the issue will be utilized to fund the redemption of its 5.100% Series D Cumulative Perpetual Preferred Stock and for general corporate purposes.

Alliant Energy’s times interest earned ratio at the end of third-quarter 2021 was 3.1, which indicates LNT’s ample liquidity to meet short-term obligations. Alliant Energy’s debt to capital at third quarter-end is more or less on par with the industry average, which indicates that LNT is managing its operations with the same amount of debt as industry peers.

Long-Term Plans

Alliant Energy announced plans to invest substantially over the next four years to strengthen the electric and gas distribution network as well as add natural gas and renewable assets to the generation portfolio. LNT has been successfully completing major construction projects on time and at or below budget.

Alliant Energy is consistently investing in renewable and natural gas-based electricity generation, and gradually lowering coal-based generation assets. Alliant Energy aims to retire all the existing coal-fired generation units by 2040, with an objective of lowering emissions from 2005 levels by 50% and 100% within 2030 and 2050, respectively.

The geographic location of LNT’s assets and favorable regulatory developments bode well for the development of wind projects, and long-term earnings growth. Alliant Energy’s earnings prospects look attractive due to ongoing additions to electric and natural gas customer volumes as well as improving demand. The ongoing economic development in LNT’s service territories is also creating fresh demand for utility services.

Zacks Rank & Price Performance

Alliant Energy currently has a Zacks Rank #2 (Buy).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Year to date, shares of Alliant Energy have moved up 8.7% compared with the industry’s 3% growth.

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Efficient Management of Debts

Alliant Energy is not the only utility taking advantage of the current low-interest environment to issue low-interest-bearing notes to redeem its old high-interest-bearing debts. Capital-intensive utility companies are managing their debt levels efficiently to lower annual capital servicing expenses.

During this year, utilities like Brookfield Infrastructure Partners L.P. BIP, NRG Energy NRG and Clearway Energy CWEN, among others, have successfully redeemed higher-interest-bearing debts using the proceeds from new low-interest bearing debts.

Brookfield Infrastructure Partners utilized the proceeds of subordinated notes worth $250 million with fixed coupon rates of 5% due May 24, 2081 for redeeming its Class A preferred units Series 5 due on Sep 30, 2021.

NRG Energy utilized the proceeds from 3.875% senior unsecured notes worth $1.1 billion due Feb 15, 2032 along with cash in hand and borrowings under liquidity facilities to repurchase all its $1 billion 7.25% senior notes due 2026 and $355 million of 6.625% senior notes (part of $1.23 billion) worth notes due 2027.

Clearway Energy utilized the proceeds from its $350 million of 3.75% senior notes due 2032, together with its existing corporate liquidity, firstly to repurchase any and all of the $350 million outstanding aggregate principal amount of its 5.000% senior notes due 2026, and secondly to pay fees and expenses incurred in connection with the repurchase of the 2026 Notes.

In the past 12 months, units of Brookfield Infrastructure Partners have moved up 12.3%, while shares of NRG Energy and Clearway Energy have moved up 16.8% and 30%, respectively, in the same time frame.


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