Alliant Energy (LNT) Unit Announces Pricing Of $300M Debt

Alliant Energy Corporation’s (NYSE:LNT) unit, Interstate Power and Light Company (“IPL”) announced that it has priced the public offering of $300 million senior debentures. These debentures have an interest rate of 3.7% and will be due on Sep 15, 2046. It is a common practice among utilities to take advantage of a low interest rate environment to refinance existing debt.

The decision to refinance existing debts will extend some of its debt repayment schedules by nearly three decades.

Utilization of Net Proceeds

IPL plans to utilize net proceeds of nearly $295.3 million, before expenses, to lower outstanding capital under its receivables purchase and sale program, reduce commercial paper classified as long-term debt and/or for general corporate purposes.

The company may also need some funds to upgrade its existing coal-based facilities. Alliant Energy has plans to upgrade some of its coal facilities to meet environmental norms and aims to lower carbon emission from its generating plants by 40% in 2030 from the 2005 levels.

ALLIANT ENGY CP Price

Debt Position

The current debt-to-capital ratio of Alliant Energy is 47.35%, a touch lower than the industry peer average of 49.04%, but higher than the S&P 500 peer average of 42.01%. This regulated electric and natural gas utility joined the S&P 500 index on Jun 30, 2016, replacing AGL Resources (NYSE:GAS) Inc.

Long-Term Prospects

Alliant Energy’s future bottom-line growth appears promising due to strong state economies in its service areas and compelling prospects for new electric generation capacity. Its geographic location and favorable regulatory developments bode well for long-term earnings growth. The company currently targets annual earnings growth of 5–7% over the long run.

Zacks Rank & Key Picks

Alliant Energy currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the utility-electric power industry are Spark Energy Inc. (NASDAQ:SPKE) , American Electric Power Co., Inc. (NYSE:AEP) and DTE Energy Company (NYSE:DTE) . Spark Energy sports a Zacks Rank #1 (Strong Buy), while American Electric Power and DTE Energy currently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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