) unit PPL Energy Supply, LLC intends to issue new 4.60% senior
notes due in 2021. PPL Energy Supply exercises this transaction
on behalf of its subsidiary PPL Ironwood, LLC. This offering will
expire on February 8, 2013. This transaction is subject to
AMEREN CORP (AEE): Free Stock Analysis Report
PPL CORP (PPL): Free Stock Analysis Report
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PPL Corporation will utilize new notes to swap majority of its
existing 8.857% senior secured bonds due in 2025.
Per the offering, the bondholders, who have agreed to offer and
surrender old notes before the date of expiration, will get
$1,270 in the form of new senior notes against each $1,000
On February 28, 2013, PPL Ironwood will pay the principal and
interest amounts to the outstanding bondholders as of February 1,
It is a common practice among the utility companies to exercise
new issuances to redeem its old debts while minimizing both
interest costs as well as the repayment tenure.
In the last couple of months, few utility providers implemented
this strategy. In August last year,
) subsidiary Ameren Illinois Company issued $400 million of 2.70%
senior secured notes due in 2022. The company utilized the net
proceeds of this offering along with other surplus cash primarily
to redeem its outstanding 9.75% and 6.25% senior secured notes
worth $450 million due in 2018.
In the third quarter of 2012, PPL Corporation's interest expenses
were $248 million compared with $240 million. With this new
issuance having lower interest rate, the company's interest
expenses are expected to fall in the forthcoming quarters.
Long-term-debt to capital ratio of PPL Corporation as of January
13, 2012 was 62.1%, much higher than its peer group ratio of
46.7%. The higher debt level is somewhat justified, as the return
on equity of 13.8% as of January 13, 2012, is more than double
with the peer group average.
We believe PPL Corporation's inorganic growth strategy and strong
credit profile are key positives for its near-term growth. In
addition, the company's strong liquidity position and
well-equipped back-up plans will enable it to handle the after
effects of the Hurricane Sandy.
However, we are skeptical about the impacts of stringent
regulations, and risks associated with delay and cancellation of
its several important projects, which may challenge the company's
future financial performance. PPL Corporation currently has a
short-term Zacks Rank #3 (Hold).
Allentown, Pennsylvania-based PPL Corporation generates and
delivers electricity and natural gas to more than 10 million
customers in the U.S. and UK.