PPL refreshes balance sheet with US$1bn CB
PPL Corp secured US$1bn from the sale of five-year convertible bonds last week that the regulated utility is using to repay bank debt, freeing up capacity to fund capex to support power demand for data centres.
Wells Fargo, Barclays, Goldman Sachs and Mizuho Securities priced the CBs after the US market close on Wednesday at a coupon and conversion premium of 3% and 20%, the investor-friendly ends of 2.5%–3% and 20%–25% talk.
The investment grade-rated utility’s shares slipped by 2.6% while the CB issue was being marketed on Wednesday to US$35.55.
PPL was among the first utilities to access the CB market as an alternative to bank debt in early 2023, when it raised US$1bn from the sale of a 2.875% CB offering that is convertible at US$35.75, a 22.5% premium to the underlying share price at the time.
PPL is using the money raised to repay short-term borrowings, including the US$509m it had drawn on a revolving credit facility as of September 30.
Like straight debt, utility CB new issues are pinpoint pricing exercises, so it’s not surprising PPL is paying a similar price on the new CBs as the ones issued in 2023.
In February, PPL unveiled a US$20bn four-year capex plan while simultaneously announcing a JV with Blackstone to develop up to six gigawatts of natural-gas combined-cycle capacity to serve hyperscale data centres. The utility affirmed that capex earlier this month in reporting Q3 earnings.