Energy utility CMS Energy Corporation (CMS) announced that it has sold $250 million senior unsecured notes. The notes will mature on September 30, 2015, and will have an interest rate of 4.25%.
 
CMS Energy offered the notes at 99.892% of face value that will yield 4.274% when held till maturity. The debt-to-capital ratio of the company at the end of the second quarter 2010 was 69.5%, which will increase by 80 basis points to 70.3% following the issue of new notes.
 
CMS Energy’s total long-term debt (including non−current portion of capital and finance lease obligations) at the end of second-quarter 2010 was $6.08 billion versus $6.09 billion at the end of 2009, reflecting a reduction of around $10 million over the first half of 2010.
 
Total interest expenses at CMS Energy at the end of second-quarter 2010 were $117.0 million, the amount of which is liable to rise by $10.6 million because of the issue of the new series of notes. In January 2010, the company issued $300 million of 6.25% senior notes due 2020, which increased the interest expense by $18.8 million annually.
 
The company continues to enjoy a strong cash position, with cash and cash equivalent, as of June 30, 2010, of $536 million, and cash provided by operating activities during the first half of 2010 of $1,048 million.
 
The adjusted earnings of CMS Energy at the end of second-quarter 2010 were 26 cents per share compared with 28 cents in the year-ago comparable period. The Zacks Consensus Estimates for third quarter fiscal 2010, fiscal year 2010 and fiscal year 2011 are 42 cents per share, $1.35 per share and $1.46 per share, respectively.
 
CMS Energy currently retains a Zacks #3 Rank (short-term Hold rating). Growth prospects look robust for the company over the long term. However, the tepid Michigan economy and the pending regulatory cases constrain the valuation, prompting us to maintain a Neutral rating on the stock.
 
CMS ENERGY (CMS): Free Stock Analysis Report
 
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