Sempra Energy’s (SRE - Analyst Report) business wing, Southern California Gas Co. (SoCalGAs) has completed the issuance of $350 million, 3.75% 30-year mortgage bonds due September 15, 2042. The interest on the bonds will be paid on a semi-annual basis on March 15 and September 15.
Sempra Energy’s unit will utilize the proceeds from this sale to finance its debt obligations especially the ones which are short-term and for general corporate purposes. On behalf of the company, various multinational banks will act as co-managers in this financial transaction.
Previously, in March 2012, Sempra Energy was involved in the sale of $600 million, 2.3% senior notes due in 2017. In addition, its subsidiary, San Diego Gas & Electric Company sold $250 million, 4.3% first mortgage bonds due 2042.
Sempra Energy’s long-term debt as of June 30, 2012 surged approximately to $10.3 billion from $9.6 billion at the end of the second quarter 2011. Interest expenses in second quarter 2012 were $113 million. Interest expenses are expected to escalate with this fresh offering of bonds.
The company’s debt-to-capital ratio at the end of second quarter 2012 stood at 52.7%, and with the issuance of bonds, the debt-to-capital ratio will increase marginally to 53.5%. However, with stable credit ratings of “Aa3” by Moody’s, “A+” by Standard & Poor and “AA-“ by Fitch, we believe the company’s credit worthiness will improve in the U.S. market and it will effectively meet its financial commitments in the near future.
Sempra Energy reiterated its 2012 pro forma earnings guidance range of $4-$4.30 per share. However, including a pipeline charge of 73 cents and a tax benefit of 19 cents per share, the company’s GAAP earnings per share are forecast in the range of $3.46 per share to $3.76 per share.
The Zacks Consensus Estimates for the third quarter and full year 2012 currently stand at $1.04 per share and $4.21 per share, respectively.
Sempra Energy’s closest peer is PG&E Corporation (PCG - Analyst Report). Like PG&E Corporation, Sempra Energy presently maintains a Zacks #3 Rank implying a short-term Hold rating.
Based in San Diego, California, Sempra Energy operates as an energy services holding company worldwide. The company operates utilities, develops new energy infrastructure, and provides energy-related services to approximately 31 million consumers worldwide. With market capitalization of $15.56 billion, the company has 17,483 employees.