Sempra (NYSE: SRE) raises $800M in 6.375% junior notes to fund Series C preferred redemption
Rhea-AI Filing Summary
Sempra completed a public offering of $800 million aggregate principal amount of its 6.375% Fixed-to-Fixed Reset Rate Junior Subordinated Notes due 2056. After underwriting discounts and before approximately $1.4 million of offering expenses, proceeds to the company were about $792.0 million.
The company intends to use the net proceeds to pay a portion of the cost to redeem all outstanding shares of its 4.875% Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Stock, Series C, subject to board approval. The notes pay 6.375% interest per year until April 1, 2031, then reset every five years to the Five-year U.S. Treasury Rate plus 2.632%, with a minimum rate of 6.375%.
Interest starts accruing on August 29, 2025 and is payable semi-annually on April 1 and October 1, beginning April 1, 2026, with final maturity on April 1, 2056. Sempra may defer interest payments within set limits and has optional redemption rights starting 90 days before April 1, 2031 and on interest payment dates thereafter, at 100% of principal plus accrued interest, subject to specified conditions.
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Insights
Sempra raises $800M in hybrid debt to help refinance higher-cost preferred equity.
Sempra issued $800,000,000 of 6.375% Fixed-to-Fixed Reset Rate Junior Subordinated Notes due 2056, receiving approximately $792.0 million in proceeds after underwriting discounts and before roughly $1.4 million of expenses. The company intends to apply the net proceeds toward redeeming all outstanding 4.875% Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Stock, Series C, subject to board approval, effectively rebalancing its capital structure within its hybrid debt and preferred layers.
The notes pay a fixed 6.375% coupon until April 1, 2031, then reset every five years at the Five-year U.S. Treasury Rate plus 2.632%, with a floor at 6.375%. This structure locks in today’s cost of capital while exposing future interest expense partly to Treasury yields, but within a defined minimum rate. Optional interest deferral and long-dated maturity give the instrument equity-like features from a credit and ratings perspective.
Sempra can redeem the notes at par plus accrued interest in a window starting 90 days before April 1, 2031, and on interest payment dates thereafter, and upon certain specified events. These call options give flexibility to refinance again if future funding conditions become more favorable. Subsequent company communications may provide additional detail once the board considers the contemplated preferred stock redemption.
8-K Event Classification
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
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Item 8.01 Other Events.
On August 29, 2025, Sempra (the “Company”) closed its public offering and sale of $800,000,000 aggregate principal amount of its 6.375% Fixed-to-Fixed Reset Rate Junior Subordinated Notes due 2056 (the “notes”). Proceeds to the Company (after deducting underwriting discounts but before deducting offering expenses payable by the Company estimated at approximately $1.4 million) from the sale of the notes were approximately $792.0 million. The Company intends to use the net proceeds from the sale of the notes to pay a portion of the cost to redeem all outstanding shares of its 4.875% Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Stock, Series C, subject to approval thereof by the Company’s board of directors. The sale of the notes was registered under a prospectus supplement and related prospectus filed with the U.S. Securities and Exchange Commission pursuant to the Company’s effective shelf registration statement on Form S-3 (Registration No. 333-272237).
The purchase and sale of the notes was made pursuant to an underwriting agreement dated August 26, 2025, with Barclays Capital Inc., Citigroup Global Markets Inc., Credit Agricole Securities (USA) Inc., MUFG Securities Americas Inc. and Santander US Capital Markets LLC, as the representatives of the several underwriters named on Schedule I thereto, pursuant to which the notes were issued and sold to such underwriters, severally and not jointly, for resale at a public offering price of 100.000% of the aggregate principal amount of the notes. A copy of the underwriting agreement is filed as Exhibit 1.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Interest on the notes accrues from and including August 29, 2025 (the “original issue date”) and is payable semi-annually in arrears on April 1 and October 1 of each year, beginning on April 1, 2026, and at maturity on April 1, 2056. The notes bear interest (i) from and including the original issue date to, but excluding, April 1, 2031 at the rate of 6.375% per annum and (ii) from and including April 1, 2031, during each Reset Period at a rate per annum equal to the Five-year U.S. Treasury Rate as of the most recent Reset Interest Determination Date plus a spread of 2.632%, to be reset on each Reset Date; provided that the interest rate during any Reset Period will not reset below 6.375% per annum (which is the same interest rate as in effect from and including the original issue date to, but excluding, April 1, 2031). So long as no event of default (as defined in the indenture referenced below) with respect to the notes has occurred and is continuing, the Company may, at its option, defer interest payments on the notes, from time to time, for one or more deferral periods of up to 20 consecutive semi-annual interest payment periods each, except that no such optional deferral period may extend beyond the final maturity date of the notes or end on a day other than the day immediately preceding an interest payment date.
The Company may redeem some or all of the notes, at its option, in whole or in part (i) on any day in the period commencing on the date falling 90 days prior to April 1, 2031 and ending on and including April 1, 2031 and (ii) after April 1, 2031, on any interest payment date, at a redemption price in cash equal to 100% of the principal amount of the notes being redeemed, plus, subject to the terms and conditions of the notes, accrued and unpaid interest on the notes to be redeemed to, but excluding, the redemption date. At the Company’s option, the Company may also redeem all of the notes upon the occurrence of certain specified events at the redemption prices provided therein, plus accrued and unpaid interest on the notes to, but excluding, the redemption date.
The foregoing description of some of the terms of the notes is not complete and is qualified in its entirety by the Officers’ Certificate attached hereto as Exhibit 4.1 (the “Officers’ Certificate”), the form of note included therein and the indenture (as defined below). The notes were issued pursuant to an indenture (the “indenture”), dated as of June 26, 2019, between the Company and U.S. Bank Trust Company, National Association, as successor in interest to U.S. Bank National Association, as trustee, which is incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission on June 26, 2019. The Officers’ Certificate (including the form of note) is incorporated herein by reference. Capitalized terms used, but not defined, in this Current Report on Form 8-K have the meanings set forth in Annex II of the Officers’ Certificate attached hereto as Exhibit 4.1.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit Number |
Description | |
| 1.1 | Underwriting Agreement, dated August 26, 2025, among Sempra and Barclays Capital Inc., Citigroup Global Markets Inc., Credit Agricole Securities (USA) Inc., MUFG Securities Americas Inc. and Santander US Capital Markets LLC, as representatives of the several underwriters named therein. | |
| 4.1 | Officers’ Certificate of the Company, dated as of August 29, 2025, including the form of 6.375% Fixed-to-Fixed Reset Rate Junior Subordinated Note due 2056. | |
| 5.1 | Opinion of Latham & Watkins LLP. | |
| 23.1 | Consent of Latham & Watkins LLP (contained in the opinion filed as Exhibit 5.1 hereto). | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| SEMPRA, | ||||||
| (Registrant) | ||||||
| Date: August 29, 2025 | By: /s/ Dyan Z. Wold | |||||
| Dyan Z. Wold Vice President, Controller and Chief Accounting Officer | ||||||
FAQ
What type of securities did Sempra (SRE) issue in this 8-K?
Sempra issued 6.375% Fixed-to-Fixed Reset Rate Junior Subordinated Notes due 2056 with an aggregate principal amount of $800,000,000.
How much cash did Sempra receive from the $800 million junior notes offering?
Sempra received approximately $792.0 million in proceeds from the notes after underwriting discounts and before estimated offering expenses of about $1.4 million.
What does Sempra plan to do with the proceeds from the junior subordinated notes?
Sempra intends to use the net proceeds to pay a portion of the cost to redeem all outstanding shares of its 4.875% Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Stock, Series C, subject to approval by its board of directors.
What are the key interest rate terms of Sempra’s 6.375% junior notes due 2056?
The notes bear interest at 6.375% per annum from the original issue date to, but excluding, April 1, 2031. After that, during each reset period, the rate equals the Five-year U.S. Treasury Rate plus 2.632%, reset on each reset date, with a floor of 6.375% per annum.
When are interest payments due on Sempra’s new junior subordinated notes?
Interest accrues from August 29, 2025 and is payable semi-annually in arrears on April 1 and October 1 each year, beginning April 1, 2026, and at maturity on April 1, 2056.
Can Sempra defer interest payments or redeem the junior subordinated notes early?
So long as no event of default has occurred and is continuing, Sempra may defer interest payments for one or more periods of up to 20 consecutive semi-annual interest periods, not beyond maturity. The company may also redeem some or all of the notes beginning 90 days before April 1, 2031 and on interest payment dates thereafter at 100% of principal plus accrued and unpaid interest, and upon certain specified events at the redemption prices provided.