NextEra Energy Capital Holdings Inc. (Capital Holdings) has entered into a 34 billion yen, three-year term-loan agreement, which may be increased up to a maximum aggregate principal amount of 40 billion yen, subject to certain terms and conditions. The term loan will be guaranteed by Capital Holdings' parent company, NextEra Energy Inc.
Upon funding of the loan, Capital Holdings exchanged the Japanese yen borrowed for dollars in the amount of approximately $424 million and entered into two cross currency basis swaps to hedge against currency movements with respect to both interest and principal payments on the loan.
The proceeds from the loan are being used for general corporate purposes. Prior to entering into the term-loan agreement, Capital Holdings prepaid existing yen term loans totaling approximately $287 million that were scheduled to mature in December. ‘This transaction demonstrates NextEra Energy's ability and commitment to maintain a diversified capital structure,’ says Armando Pimentel, executive vice president of finance and chief financial officer of NextEra Energy. ‘Increasing our sources of capital is prudent in today's financial environment.’