Moody's on June 11 characterized Entergy Corp.'s $1 billion offering of common shares as credit positive.
"The credit-positive issuance will mitigate some of the deterioration the company expects in its cash-flow-to-debt ratios from the negative effect of federal tax reform, and help defer future debt issuance," the rating agency said in a report. "Financing the deferred tax refunds with equity, as opposed to financing with debt, helps reduce the amount of new debt going forward and results in less future parent company debt, a credit positive."
On June 7, Entergy priced a public offering of 13,289,037 shares of its common stock at $75.25 per share with a forward component. Underwriters have a 30-day option to purchase up to an additional 1,993,355 shares to cover any overallotments. The offering is expected to close by June 11.
Moody's expects Entergy to have a ratio of cash flow-from-operations-to-debt of about 12% in 2018, and about 13% in 2019. Both ratios are approximately 100 basis points higher than Moody's expectations without the equity issuance, according to a June 11 note.
Morgan Stanley, Goldman Sachs & Co. LLC, J.P. Morgan, Barclays, Bank of America Merrill Lynch, Citigroup and Wells Fargo Securities are acting as joint book-running managers of the offering.
