CMS Energy Looks To Limit Future Dilution From Converts

A recent note from Deutsche Bank said that CMS Energy

issued $250 million of new 5-year parent debt at 4.25%. CMS plans to use the proceeds to repay its 4.5% convertible preferred securities, which it plans to call. The exact conversion price is unknown presently. Deutsche Bank expects a small near-term financial impact on CMS as a result of the conversion. The interest rate on the new issuance is roughly in line with the rate paid on the preferreds (4.25% vs 4.5%), although the interest on the new debt is tax deductible. By 2012, DB estimates a potential $0.02 benefit based on the tax impact and the slightly lower diluted share count. Deutsche Bank reiterates it's Buy rating on CMS. It views CMS as a relatively low-risk utility with good growth opportunities that now has a yield in line with peers after its dividend boost last month. CMS Energy closed Monday at $18.05