Integrys Energy Group, Inc. (NYSE:TEG) is currently in the market with a $25 junior subordinate debt offering. The deal is expected to price at approximately 6% and should be rated Baa2/BBB.
Integrys is a diversified energy holding company whose subsidiaries provide products and services in both the regulated and nonregulated energy markets. As of December 31, 2012, Integrys had six regulated utility subsidiaries, which served approximately 1,690,000 natural gas and 495,000 electric customers in Illinois, Michigan, Minnesota, and Wisconsin. The nonregulated energy supply and services subsidiary serves residential and small commercial and industrial customers in the northeast quadrant of the United States. In addition, the company has an equity ownership interest in American Transmission Company LLC (a federally regulated electric transmission company with operations in Wisconsin, Michigan, Minnesota, and Illinois) of approximately 34% at June 30, 2013.
A deal summary:
|Issuer||Integrys Energy Group, Inc.|
|Expected Maturity||August 1, 2073|
|Optional Redemption||August 1, 2023 at 100%|
|Use of Proceeds||The net proceeds from the sale of the Junior Subordinated Notes will be used to reduce short-term debt and for general corporate purposes.|
The prospectus can be found here.
A brief financial snapshot of Integrys is:
|EBITDA Growth (5y)||5.01%|
|Integrys 6.11% 2066||Baa2/BBB||5.89%|
|Gulf power (NYSE:SO) 5.60% perpetual||Baa2/BBB+||5.93%|
|NextEra Energy (NYSE:NEE) 5% 2073||Baa2/BBB||6.19%|
Bottom Line: Given the business profile of Integrys and the more regulated nature of the company, I believe that 6% is an appropriate level and inclusion in an income portfolio given the rate and the diversification aspect makes sense.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.