NextEra Energy Inc.’s (NEE) unit, FPL Group Capital Inc., announced that it will sell $400 million in debentures. The debentures will mature on September 1, 2015, and will have an interest rate of 2.6%. NextEra Energy will act as a guarantor to the debt issue.
FPL Group Capital offered the debentures at 99.967% of face value and will yield 2.607% when held till maturity. The net proceeds of the issue will be added to the general fund of the FPL Group Capital and will be used to repay all or a portion of its debt under certain term-loan agreements. The company also intends to use the funds for other general corporate purposes, including the repayment of a portion of its outstanding commercial paper.
FPL Group Capital’s total debts at the end of second-quarter 2010 were $8.2 billion and the total debt of NextEra Energy at quarter end was $20.19 billion.
The debt-to-capital ratio of NextEra Energy at the end of the second quarter of 2010 was 60%, which was marginally higher than the 2009 year-end level of 59%.
The interest expenses of NextEra Energy at the end of second-quarter 2010 were $247 million versus $215 million at the end of the year-ago quarter. With this note offering, the debt level of the company will rise further and the company will also have to incur a higher interest expense to service the debt.
The adjusted earnings of NextEra at the end of second-quarter 2010 were $1.11 per share compared with 99 cents in the year-ago comparable period. NextEra Energy expects adjusted earnings per share to be in the range of $4.25 to $4.65 for 2010. The Zacks Consensus Estimate for fiscal year 2010 of $4.37 per share is below the midpoint of the earnings expectation of the company.
NextEra Energy currently retains a Zacks #3 Rank (short-term Hold rating). We also maintain a Neutral rating on the stock.
Based in Juno Beach, Florida, NextEra Energy through its subsidiaries engages in the generation, transmission, distribution and sale of electric energy in the United States and Canada.
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