Georgia Power: Investor demand drove size of bond sale up; 30-year coupon rates attractive

By Andrea Heisinger

New York, May 25 - The $600 million bond sale for Georgia Power Co. went very well and was about two times oversubscribed, a spokesperson from parent company Southern Co. said on Tuesday.

David Brooks, the financial principal and Southern Co. treasurer, said in an e-mail message that there was $1.1 billion in demand for the company's new 5.4% notes due 2040 that were priced Monday. The size of the issue was increased from $350 million.

The coupon tied the lowest coupon rate on the company's books for bonds with a 30-year maturity, Brooks said. Georgia Power last sold 30-year paper in 2003.

The timing of the sale was due to the redemption of $350 million in higher-cost outstanding debt, he said, with the redemption notice released shortly after the new bonds were priced.

The increased size of the deal was actually what was initially targeted.

"We wanted to sell $600 million from the start, but with the volatile markets we decided to start the marketing process with $350 million," Brooks said. "We received more-than-adequate demand from investors and upsized the transaction."

The company was also strategic with the maturity of the bonds. Brooks said Georgia Power has more than $800 million in long-term outstanding debt.

"With each new issuance of debt, we examine the financial markets and the company's debt maturity profile," he said. "We try to get the lowest cost debt without overburdening any year with maturing debt. The 30-year rates looked compelling to us."

The utility is based in Atlanta.

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