Southern Company Prices $1.3 Billion Junior Subordinated Note Offering
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Key Takeaways
- Southern Company is offering $1.3 billion in Series 2026A Junior Subordinated Notes due in 2058.
- The notes carry a 6.00% initial interest rate, transitioning to a reset rate based on the Five-Year Treasury plus 1.993% in 2033.
- A 6.00% interest rate floor is established for all future reset periods.
- The issuer has the right to defer interest payments for up to 10 years, during which time dividend payments are restricted.
- Net proceeds before expenses are estimated at $1.287 billion after a $13 million underwriting discount.
According to SEC filings dated March 17, 2026, Southern Company is issuing $1.3 billion in aggregate principal of Series 2026A Junior Subordinated Notes. The securities are priced at 100% of their face value and are scheduled to mature on April 1, 2058. The notes will be available in minimum denominations of $2,000, with further increments of $1,000.
The interest structure is divided into two phases. From the date of issuance until April 1, 2033, the notes will pay a fixed annual rate of 6.00%. Starting on that date, the rate will reset every five years based on the prevailing Five-Year Treasury Rate plus a spread of 1.993%. The agreement stipulates that the interest rate will never be adjusted below the initial 6.00% floor.
Southern Company maintains the option to delay interest payments for up to 10 consecutive years per instance, provided no event of default is ongoing. While interest is being deferred, it will continue to accrue at the then-applicable rate. During these optional deferral periods, the company is generally prohibited from declaring dividends, repurchasing capital stock, or making payments on debt securities that rank equally with or junior to these notes.
The underwriting syndicate for the offering includes Citigroup, J.P. Morgan, Mizuho, Morgan Stanley, and US Bancorp. After accounting for a 1.000% underwriting discount totaling $13 million, Southern Company expects to net approximately $1.287 billion before additional offering expenses.
