SRE
Sempra
NYSE
8-K: San Diego Gas & Electric Issues $600 Million in First Mortgage Bonds
Sentiment:
Debt Issuance Announcement
19 March 2024 4:21 PM
San Diego Gas & Electric Company has agreed to sell $600 million in first mortgage bonds due in 2054 to a group of underwriters.
Capital raise
San Diego Gas & Electric is raising $600 million through the issuance of first mortgage bonds.
The net proceeds are estimated to be approximately $588.7 million after deducting the underwriting discount but before deducting the company's estimated offering expenses.
Summary
- San Diego Gas & Electric Company, a subsidiary of Sempra, has entered into an underwriting agreement to issue and sell $600 million of its 5.550% First Mortgage Bonds, Series BBBB, due 2054.
- The bonds will be sold to underwriters for resale at a public offering price of 98.984% of the principal amount.
- The offering is being made under a prospectus supplement and related prospectus filed with the U.S. Securities and Exchange Commission.
- The underwriting agreement was signed on March 18, 2024, and the bond sale is expected to close on March 22, 2024.
- The net proceeds to the company are estimated to be approximately $588.7 million after deducting the underwriting discount but before deducting the company's estimated offering expenses.
Sentiment
Score: 7
Explanation: The document reflects a standard financing activity for a utility company. The terms are reasonable, and the process is well-defined. There are no significant red flags, but also no extraordinary positive developments.
Positives
- The bond issuance provides San Diego Gas & Electric with a significant amount of capital, approximately $588.7 million in net proceeds.
- The offering is being conducted through a registered public offering, which provides transparency and regulatory oversight.
- The bonds have a fixed interest rate of 5.550%, providing predictable interest expenses for the company.
Negatives
- The bonds are being sold at a discount to their face value, with a public offering price of 98.984%.
- The company will incur underwriting discounts and offering expenses, reducing the net proceeds from the bond sale.
Risks
- The underwriting agreement contains standard clauses regarding potential defaults by underwriters, which could impact the completion of the bond sale.
- The company is subject to various risks related to its business and operations, as detailed in the prospectus, which could affect its ability to repay the bonds.
- Changes in market conditions or interest rates could impact the value of the bonds.
Future Outlook
The company intends to use the net proceeds from the bond sale for general corporate purposes, as detailed in the prospectus.
Industry Context
This bond issuance is a common method for utility companies to raise capital for infrastructure projects and general operations. The terms of the bonds, including the interest rate and maturity date, are typical for this type of financing in the current market environment.
Comparison to Industry Standards
- The 5.550% coupon rate is within the typical range for investment-grade utility bonds with a similar maturity.
- The make-whole call provision is a standard feature in corporate bond issuances, providing the company with flexibility in managing its debt.
- The underwriting syndicate includes major investment banks, which is typical for a bond offering of this size and nature.
- Comparable companies such as Southern California Edison and Pacific Gas and Electric have also issued similar bonds to fund their operations and capital expenditures.
Stakeholder Impact
- Shareholders will see an increase in the company's debt, but also an increase in available capital.
- Employees will not be directly impacted by this transaction.
- Customers will not be directly impacted by this transaction.
- Suppliers and creditors will see an increase in the company's financial activity.
Next Steps
- The company will complete the sale of the bonds on March 22, 2024.
- The company will use the net proceeds for general corporate purposes.
- The company will continue to comply with all reporting requirements related to the bond issuance.
Key Dates
- 2023-04-03: Date of the base prospectus.
- 2024-03-18: Date of the underwriting agreement and preliminary prospectus supplement.
- 2024-03-22: Expected closing date of the bond sale and settlement date.
- 2053-10-15: Par call date for the bonds.
- 2054-04-15: Maturity date of the bonds.
Keywords
First Mortgage Bonds, San Diego Gas & Electric, Debt Financing, Underwriting Agreement, Bond Offering, Fixed Income, Capital Markets, Sempra
SRE
Sempra
NYSE
Sector: Utilities
Filings with Classifications
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Quarterly Report
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Better than expected
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Quarterly Report
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Better than expected
8 May 2025 10:53 AM
Earnings Release
- Sempra's first-quarter 2025 GAAP earnings increased to $906 million ($1.39 per diluted share) from $801 million ($1.26 per diluted share) in the first quarter of 2024.
- Adjusted first-quarter 2025 earnings rose to $942 million ($1.44 per diluted share) from $854 million ($1.34 per diluted share) in 2024.
Better than expected
28 March 2025 4:14 PM
Proxy Statement
- Sempra's three-year total shareholder return far outpaced the return of the S&P 500 Utilities Index and more than tripled the returns of the S&P 500 and S&P 500 Utilities Indices since the beginning of this century (from December 31, 1999 through December 31, 2024).
Capital raise
25 March 2025 4:17 PM
Debt Offering
- San Diego Gas & Electric Company is raising $850 million through the issuance of 5.400% First Mortgage Bonds, Series CCCC, due 2035.
- The net proceeds are estimated to be approximately $842.1 million after deducting the underwriting discount but before deducting the Companys estimated offering expenses.
Worse than expected
25 February 2025 4:57 PM
Annual Report
- Earnings attributable to common shares decreased from $3.030 billion in 2023 to $2.817 billion in 2024.
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Delay expected
25 February 2025 4:57 PM
Annual Report
- The ECA LNG Phase 1 project is expected to commence commercial operations in the spring of 2026, which is later than previously anticipated.
- The first and second trains of the PA LNG Phase 1 project are expected to commence commercial operations in 2027 and 2028, respectively, which is later than previously anticipated.
Capital raise
25 February 2025 4:57 PM
Annual Report
- Sempra established an ATM program providing for the offer and sale of shares of Sempra common stock having an aggregate gross sales price of up to $3.0 billion.
- Sempra entered into a forward sale agreement under the ATM program for the sale of 2,909,274 shares of Sempra common stock.
Worse than expected
25 February 2025 10:54 AM
Earnings Release
- Full-year 2024 GAAP earnings decreased compared to 2023.
- The revision of the full-year 2025 EPS guidance range to $4.30 to $4.70 may be viewed negatively.
Capital raise
21 November 2024 4:05 PM
Debt Offering
- Sempra closed a public offering of $400 million of 6.625% Fixed-to-Fixed Reset Rate Junior Subordinated Notes due 2055 and $600 million of 6.550% Fixed-to-Fixed Reset Rate Junior Subordinated Notes due 2055.
- The total proceeds to Sempra from the sale of the notes were approximately $990 million, after deducting underwriting discounts but before deducting offering expenses estimated at $1.7 million.
Worse than expected
6 November 2024 3:40 PM
Quarterly Report
- Sempra's third quarter earnings were worse than the same period last year due to lower revenues and higher interest expenses.
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Capital raise
6 November 2024 3:40 PM
Quarterly Report
- Sempra established an ATM program to offer and sell shares of common stock with an aggregate gross sales price of up to $3.0 billion.
- The company intends to use the net proceeds for working capital and other general corporate purposes, including to partly finance anticipated increases to its long-term capital plan and to repay outstanding commercial paper and potentially other indebtedness.
Capital raise
6 November 2024 10:50 AM
Quarterly Report
- The company has put in place a $3 billion at-the-market (ATM) equity offering program to support general corporate purposes including its future financing needs.
Worse than expected
6 November 2024 10:50 AM
Quarterly Report
- Third-quarter 2024 GAAP and adjusted earnings were lower compared to the same period in 2023.
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Capital raise
9 September 2024 4:02 PM
Debt Offering Announcement
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- The net proceeds to the company are approximately $1.238 billion after deducting underwriting discounts.
Capital raise
9 August 2024 4:45 PM
Debt Issuance Announcement
- Southern California Gas Company is raising $600 million through the issuance of First Mortgage Bonds.
- The net proceeds are estimated to be approximately $593.2 million after deducting the underwriting discount.
Worse than expected
6 August 2024 3:48 PM
Quarterly Report
- Sempra's year-to-date earnings were worse than the same period last year, primarily due to lower income tax benefits and unrealized losses on commodity derivatives.
Capital raise
6 August 2024 3:48 PM
Quarterly Report
- Sempra completed an offering of 19,242,010 shares of its common stock in November 2023.
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Worse than expected
6 August 2024 10:54 AM
Quarterly Report
- Sempra's adjusted earnings for the second quarter of 2024 were lower than the same period in 2023.
- Sempra's adjusted earnings for the first six months of 2024 were also lower than the same period in 2023.
Delay expected
6 August 2024 10:54 AM
Quarterly Report
- The Energa Costa Azul LNG Phase 1 project has experienced labor and productivity challenges, which has delayed the expected mechanical completion and first LNG to 2025, with commercial operations targeted for spring 2026.
Capital raise
31 May 2024 4:02 PM
Debt Offering Announcement
- Sempra raised $500 million through the issuance of junior subordinated notes.
- The proceeds will be used for general corporate purposes.
Capital raise
7 May 2024 4:29 PM
Quarterly Report
- Sempra completed an offering of 17,142,858 shares of common stock in November 2023.
- The company expects to settle forward sale agreements related to the offering by December 31, 2024, which may result in additional cash proceeds.
- Sempra may elect cash settlement or net share settlement for all or a portion of its obligations under the forward sale agreements.
Worse than expected
7 May 2024 4:29 PM
Quarterly Report
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Worse than expected
7 May 2024 11:02 AM
Quarterly Report
- Sempra's GAAP earnings decreased from $969 million in Q1 2023 to $801 million in Q1 2024.
- Adjusted earnings also decreased from $922 million in Q1 2023 to $854 million in Q1 2024.
Better than expected
17 April 2024 4:18 PM
Proxy Statement Supplement
- Sempra achieved record revenue of $16.7B in 2023.
- GAAP EPS has grown at a 22.9% CAGR and adjusted EPS has grown at a 10.3% CAGR from 2018-2023.
- Sempra increased its five-year capital plan by 20% to $48 billion.
Better than expected
25 March 2024 8:01 AM
Proxy Statement
- Sempra's business strategy helped the company deliver a series of record financial results in 2023.
- The company's total shareholder return has outpaced the return of the S&P 500 Utilities Index during the past one, three and five years.
- Sempra California reduced methane emissions by approximately 70% from 2015 levels through 2022.
- 2023 annual bonuses were achieved at 176% of target based on performance on ABP Earnings, Safety Measures, and Sustainability Measures.
- The overall payout for the 2021-2023 LTIP awards based on relative TSR and EPS growth was 163% of target.
Capital raise
19 March 2024 4:21 PM
Debt Issuance Announcement
- San Diego Gas & Electric is raising $600 million through the issuance of first mortgage bonds.
- The net proceeds are estimated to be approximately $588.7 million after deducting the underwriting discount but before deducting the company's estimated offering expenses.
Capital raise
18 March 2024 4:40 PM
Debt Issuance Announcement
- Southern California Gas Company raised $500 million through the issuance of First Mortgage Bonds.
- The proceeds will be used for general corporate purposes.
Capital raise
14 March 2024 4:01 PM
Debt Offering Announcement
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- The net proceeds to the company were approximately $594 million after deducting underwriting discounts but before other expenses.
Capital raise
13 March 2024 4:08 PM
Debt Offering Announcement
- Southern California Gas Company is raising $500 million through the issuance of First Mortgage Bonds.
- The net proceeds are estimated to be approximately $492.4 million after deducting underwriting discounts.
Better than expected
27 February 2024 10:55 AM
Annual Results
- Sempra's full-year 2023 GAAP earnings of $3.03 billion were significantly better than the $2.09 billion reported in 2022.
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