Duke Energy Corporation (DUK - Analyst Report) has launched PremierNotes that will provide opportunity to the individuals and other qualified investors to make direct investments in new debt of the company.
PremierNotes will have interest rate set at least a quarter of a percentage point higher than the average rate of taxable U.S. money-market mutual funds, which will be based on published weekly rates.
The persons investing with the minimum required balance of $1,000 will be eligible to receive convenient services such as free check-writing and transfers to and from linked checking accounts. The investors will be bound to invest up to $250,000. Moreover, they will have the liberty to redeem the PremierNotes investments as per their preference. There are no maintenance fees or check fees for redemption checks of $250 or more.
PremierNotes, a notes program with floating rate of interest, will act as a competitive substitute to other short-term cash investments such as bank accounts and short-term Certificates of Deposit. Duke Energy is expected to use the net proceeds from the sale of notes for general corporate purposes that include capital expenditures and the repayment of other debt.
Duke Energy’s stable U.S. electricity and gas operations generate a relatively stable and growing earnings stream. Looking ahead, our bullish outlook for the company is supported by its ongoing merger proceedings with Progress Energy Inc. (PGN) paving the way for the largest U.S. utility. Moreover, its strong balance sheet and ongoing capital expansion projects add visibility to the story.
However, valuation continues to be restrained by a number of factors, including the present unfavorable macro backdrop, predominantly fossil-fuel based generation assets, tepid demand for electricity, foreign currency exchange volatility and pending regulatory cases. Duke presently retains a short-term Zacks #3 Rank (Hold), which corresponds to our long-term Neutral recommendation on the stock.
Headquartered in Charlotte, N.C., Duke Energy is one of the largest electric power holding companies in the United States. Its commercial power and international business segments own and operate diverse power generation assets in North America and Latin America, including a growing portfolio of renewable energy assets in the United States.