On May 16, 2025, Southern California Gas Company (SoCalGas), an indirect subsidiary of Sempra (NYSE: SRE), successfully closed a significant bond issuance totaling \(1.1 billion. This offering included \)600 million of 5.450% First Mortgage Bonds, Series DDD, maturing in 2035, and \(500 million of 6.000% First Mortgage Bonds, Series EEE, due in 2055. Net proceeds, after underwriting discounts but prior to other estimated offering expenses of approximately \)2.1 million, represent substantial capital inflows poised to support SoCalGas’s strategic infrastructure investments and growth initiatives. Source: SEC 8-K Report
This capital raise aligns with Sempra’s broader financial strategy focused on maintaining a strong balance sheet while pursuing accelerated infrastructure development. As of December 31, 2024, Sempra bore long-term debt of approximately \(31.56 billion within total assets of \)96.16 billion and total liabilities of $58.37 billion. The infusion from this bond issuance further strengthens SoCalGas’s liquidity profile and capital resources for future growth.
In recent earnings call discussions, Sempra’s senior executives underscored a $40 billion five-year capital plan, spotlighting a compound annual growth of 9% in their regulated rate base, with over 70% dedicated to expanding electric infrastructure. This growth trajectory is founded upon robust macroeconomic tailwinds and favorable regulatory frameworks across their core markets.
Sempra’s capital strategy, as articulated in their prior earnings disclosures, employs a disciplined approach to financing that prioritizes reinvested operating cash flows combined with strategically raised debt financing aligned with authorized capital structures. This method aims to secure the lowest cost of capital, sustaining dividend growth and providing financial flexibility. The company has historically complemented debt financing with asset sales, project-level equity, and occasionally parent-level equity issuance, ensuring a balanced and shareholder-friendly capitalization.
Notably, SoCalGas has been actively supporting California’s green energy transition, including advancing the development of hydrogen hubs alongside over 100 partners, in collaboration with the Department of Energy. These initiatives seek to position SoCalGas at the forefront of cleaner fuel infrastructure benefiting their customer base.
The bond offerings, bearing semiannual interest payable on June 15 and December 15 starting December 15, 2025, provide SoCalGas with a cost-effective financing instrument to facilitate these capital-intensive projects. The optional early redemption provisions embedded in the bond terms offer additional financial management flexibility.
The issuance’s timing and scale not only reflect Sempra’s commitment to sustainable growth and operational excellence but also position the company to seize emerging infrastructure opportunities amid ongoing energy sector transformations.
In conclusion, Sempra’s latest $1.1 billion bond issuance by Southern California Gas Company stands as a compelling testament to the company’s robust financial stewardship and strategic foresight. Combined with a multi-billion-dollar capital expenditure plan and steady earnings growth projections, Sempra demonstrates a strong capability to deliver long-term shareholder value while advancing critical energy infrastructure projects.
Tags: SRE, Sempra, FY2025, infrastructure funding, bond issuance, capital strategy