NiSource (NI) Issues Notes Worth $2B To Refinance Debts

NiSource Inc. (NYSE:NI) announced that NiSource Finance Corp., a subsidiary, has completed the sale of $1 billion of 10-year Notes and $1 billion of 30-year Notes. The $1 billion 3.490% Notes is due 2027 and another $1 billion 4.375% Notes is due 2047.

Utilization of Proceeds

On May 11, 2017, NiSource Finance announced cash tender offers for four series of its outstanding debt securities. According to the terms of the tender, the company offered to purchase any and all of its outstanding 6.125% Notes which are due 2022 for cash.

NiSource Finance said that it will utilize part of the net proceeds from the sale of the Notes to fund the purchase price of its previously announced tender offers. These offers include the purchase of approximately $1,095 million aggregate principal amount of four series of its outstanding notes.

The company intends to utilize the balance to finance capital expenditures and other general corporate purposes. NiSource issues notes from time to time to meet its financial obligation and to fund its expansion programs.

Long-Term Plans

NiSource plans to invest nearly $1.6–$1.8 billion annually in planned utility infrastructure from 2018 to 2020 and has identified long-term infrastructure investments worth $30 billion. In its efforts to bring down green house gas emission, the company has been shifting its focus toward alternative energy.

NiSource projects coal to drop to 42% of its generation mix by 2023 from the current level of 78%. The company will do the same by retrofitting emission control equipment in its existing coal plants, retiring old coal plants and replacing the coal fired units by renewable sources. With the current pulse in the U.S. market favoring clean energy, NiSource’s investment in this field is commendable.

Utilities Lowering Emission

Irrespective of President Trump’s view of removing the clean power plan, the major utility companies are focusing on reducing their emission level, which is not only helpful for the environment but will also help customers to save millions of dollars.

Earlier NextEra Energy, Inc.’s (NYSE:NEE) subsidiary, Florida Power & Light Company (FPL), filed a petition with the Florida Public Service Commission (PSC), seeking permission for shutting down St. Johns River Power Park (SJRPP) by Dec 2017. SJRPP, a 1,300-megawatt (MW) coal-fired plant, is jointly owned by FLP and JEA. (Read more: NextEra Unit to Close SJRPP Coal Plant, Upgrade Fleet)

In Mar 2017, Xcel Energy (NYSE:XEL) announced its plans of adding 3,380 megawatts (MWs) of wind generation to its existing system by building 11 new wind firms in seven states. The company’s target is to invest $3.5 billion in the said project in the next five years. (Read more: Xcel Energy to Invest in Wind Energy to Lessen Emission)

Price Movement

In the last six months, shares of NiSource’s have rallied 13.6% compared with the Zacks categorized Utility – Electric Power industry’s gain of 8.9%.

Zacks Rank and Another Stock to Consider

NiSource carries a Zacks Rank #2 (Buy). Another stock worth considering in the same space is RWE AG (OTC:RWEOY) , sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

RWE AG's Zacks Consensus Estimate for 2017 moved up nearly 24.7% to $2.02 per share in the last 60 days.

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