Published on 9/15/2020 in the Prospect News Investment Grade Daily.
New Issue: Southern sells $1.25 billion of 4% subordinated notes due 2051 at par
By Cristal Cody
Tupelo, Miss., Sept. 15 – The Southern Co. priced $1.25 billion of 4% fixed-to-fixed reset rate junior subordinated notes due Jan. 15, 2051 (Baa3/BBB/BBB-) on Tuesday at par, according to a market source and an FWP filing with the Securities and Exchange Commission.
Initial price talk was at the 4.25% area.
The interest rate will reset on Jan. 15, 2026 at Treasuries plus 373.3 basis points.
Bookrunners were Wells Fargo Securities, LLC, Barclays, Citigroup Global Markets Inc., MUFG and Truist Securities, Inc.
The company also sold $750 million of 4.2% $25-par series 2020C junior subordinated notes due Oct. 15, 2060.
Proceeds will be used to redeem the $1 billion 2015A 6.25% junior subordinated notes due Oct. 15, 2075 and repay $200 million on the company’s credit facility and all $75 million of its term loan. Any remaining proceeds will be used for general corporate purposes.
Southern is an Atlanta-based gas and electric utility company.
| Issuer: | Southern Co.
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| Amount: | $1.25 billion
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| Description: | Series 2020B fixed-to-fixed reset rate junior subordinated notes
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| Maturity: | Jan. 15, 2051
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| Bookrunners: | Wells Fargo Securities, LLC, Barclays, Citigroup Global Markets Inc., MUFG and Truist Securities, Inc.
|
| Co-managers: | Scotia Capital (USA) Inc., U.S. Bancorp Investments, Inc., BBVA Securities Inc., Commerz Markets LLC, Fifth Third Securities, Inc., Regions Securities LLC, C.L. King & Associates, Inc., R. Seelaus & Co., LLC and Siebert Williams Shank & Co., LLC
|
| Coupon: | 4%; resets Jan. 15, 2026 at Treasuries plus 373.3 bps
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| Price: | Par
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| Yield: | 4%
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| Call features: | At par during any period from and including the Oct. 15 preceding an interest reset date
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| Trade date: | Sept. 15
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| Settlement date: | Sept. 18
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| Ratings: | Moody’s: Baa3
|
| S&P: BBB
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| Fitch: BBB-
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| Distribution: | SEC registered
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| Price guidance: | 4.25% area
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