By Cristal Cody
Chicago, May 10 – American Water Capital Corp. priced $1.1 billion of notes (Baa1/A) in two equal-sized tranches on Monday, according to an FWP filed with the Securities and Exchange Commission.
The issuer sold $550 million of 2.3% notes due June 1, 2031 at 99.696 to yield 2.334%.
The 2031 notes priced at a spread of Treasuries plus 73 basis points, lower than talk in the Treasuries plus 100 bps area, based on information from a market source.
The tranche has a make-whole call based on a premium of Treasuries plus 15 bps and then a par call in the last three months of the life of the notes.
Additionally, the company sold $550 million of 3.25% senior notes due June 1, 2051 at 99.713 to yield 3.265%.
The 2051 notes priced a spread of 93 bps over Treasuries, also lower than talk in the 120 bps area.
The 2051 notes have a make-whole call with the same Treasuries plus 15 bps premium that converts to a par call six months before the maturity date.
J.P. Morgan Securities LLC, U.S. Bancorp Investments, Inc., Wells Fargo Securities, LLC, BofA Securities, Inc., Mizuho Securities USA LLC, MUFG, PNC Capital Markets LLC, RBC Capital Markets, LLC and TD Securities (USA) LLC are the joint bookrunners.
Proceeds will be used to lend funds to parent company American Water Works Co., Inc. and its subsidiaries in the regulated businesses segment; to prepay up to $340.6 million of the issuer’s outstanding long-term debt due in 2021 and 2023, which have a weighted average interest rate of 5.98%; to repay commercial paper of the issuer, which totaled $1.19 billion as of May 7 and has a weighted average maturity of 11 days and a weighted average annual interest rate of 0.17%; and for general corporate purposes.
American Water is a water and wastewater utility company based in Camden, N.J.
| Issuer: | American Water Capital Corp.
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| Support provider: | American Water Works Co., Inc.
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| Issue: | Senior notes
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| Amount: | $1.1 billion
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| Bookrunners: | J.P. Morgan Securities LLC, U.S. Bancorp Investments, Inc., Wells Fargo Securities, LLC, BofA Securities, Inc., Mizuho Securities USA LLC, MUFG, PNC Capital Markets LLC, RBC Capital Markets, LLC and TD Securities (USA) LLC
|
| Co-managers: | BNY Mellon Capital Markets, LLC, Regions Securities LLC, Truist Securities, Inc., Academy Securities, Inc. and Cabrera Capital Markets LLC
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| Trade date: | May 10
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| Settlement date: | May 14
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| Ratings: | Moody’s: Baa1
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| S&P: A
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| Distribution: | SEC registered
|
|
|
| 2031 notes
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| Amount: | $550 million
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| Maturity: | June 1, 2031
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| Coupon: | 2.3%
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| Price: | 99.696
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| Yield: | 2.334%
|
| Spread: | Treasuries plus 73 bps
|
| Call features: | Make-whole call at Treasuries plus 15 bps until March 1, 2031; thereafter at par
|
| Price talk: | Treasuries plus 100 bps area
|
|
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| 2051 notes
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| Amount: | $550 million
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| Maturity: | June 1, 2051
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| Coupon: | 3.25%
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| Price: | 99.713
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| Yield: | 3.265%
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| Spread: | Treasuries plus 93 bps
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| Call features: | Make-whole call at Treasuries plus 15 bps until Dec. 1, 2050; thereafter at par
|
| Price talk: | Treasuries plus 120 bps area
|
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