In a significant financial move, Southern California Gas Company, an indirect subsidiary of the energy services holding company Sempra, has entered into an underwriting agreement with a consortium of banks for the issuance of $600 million in bonds. The transaction was announced on Thursday, August 8, 2024, and involves the sale of 5.050% First Mortgage Bonds, Series CCC, due in 2034.
The bonds will be offered at a public offering price of 99.514% of their aggregate principal amount. The underwriting group, consisting of Credit Agricole (OTC:CRARY) Securities (USA) Inc., MUFG Securities Americas Inc., RBC Capital Markets, LLC, and Truist Securities, Inc., will handle the sale of the bonds to investors.
Sempra, the parent company, is known for its involvement in the energy and transportation sectors and is incorporated in California. The company's common stock and junior subordinated notes are traded on the New York Stock Exchange under the symbols SRE and SREA, respectively.
In other recent news, Sempra Energy (NYSE:SRE)'s indirect subsidiary, Southern California Gas Company (SoCalGas), has issued $600 million in bonds through an underwriting agreement with Credit Agricole Securities, MUFG Securities Americas, RBC Capital Markets, and Truist Securities. This financial move is expected to secure capital for SoCalGas's operations and investments.
Meanwhile, Sempra reported a solid second quarter in 2024, with an adjusted EPS of $0.89, and reaffirmed its full-year 2024 adjusted EPS guidance range. This positive performance led BMO Capital Markets to raise its price target for Sempra Energy to $90, citing the company's potential for regulated growth and positive developments expected by the end of 2024.
In terms of expansion, Sempra has a significant role in Texas's energy infrastructure development, with Oncor's five-year capital plan in Texas set at $24 billion. The company anticipates building a substantial portion of the $13-15 billion transmission investments filed by ERCOT. However, Sempra Infrastructure's ECA LNG Phase 1 project has been delayed until spring 2026 due to labor retention and productivity challenges. Despite these setbacks, the company remains confident in meeting its financial targets and delivering returns.
InvestingPro Insights
In light of Southern California Gas Company's recent bond issuance, an examination of its parent company, Sempra's financial metrics and analyst sentiment may provide investors with a broader context for this financial move. According to InvestingPro data, Sempra boasts a market capitalization of $49.62 billion, indicating a substantial presence in the energy sector. The company's P/E ratio stands at 16.66, which, when paired with a PEG ratio of 0.9, suggests that the stock is trading at a reasonable price relative to its near-term earnings growth potential.
InvestingPro Tips reveal that Sempra has a history of consistent dividend payments, having raised its dividend for 13 consecutive years and maintained payments for 27 years. This demonstrates the company's commitment to shareholder returns. Additionally, four analysts have revised their earnings estimates upwards for the upcoming period, reflecting a positive outlook on the company's financial performance. For investors seeking further insights, there are additional InvestingPro Tips available, which can be found on the InvestingPro platform.
These financial indicators and analyst sentiments could be pertinent to investors considering the bond offering by Southern California Gas Company, as they reflect the financial health and stability of the parent company, Sempra.
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