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Analyzing NextEra Energy’s Debt Profile and Liquidity Position

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NextEra Energy’s Debt profile

With no major unexpected capital outlays, NextEra Energy’s debt as of September 30, 2015, should be close to its debt as of June 30, 2015.

NextEra Energy (NEE) had total debt of $29.8 billion on its books as of June 30, 2015. Most of its debt ($25.2 billion) is in the form of long-term debt obligations. The remaining portion is in the form of short-term debt and the current portion of long-term debt.

NEE had a debt-to-equity (or DE) ratio of 1.38x and a debt-to-market (or DM) capitalization ratio of 0.7x. Among the top five utilities (XLU), Dominion Resources (D) has the highest DE ratio at 1.9x.

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Power companies own large asset bases. So another key debt metric in the industry is the debt-to-asset ratio. NextEra has a debt-to-asset ratio of 0.4x, which is somewhat higher than the average for the top five players. However, its total debt-to-EBITDA (earnings before interest, taxes, depreciation, and amortization) ratio of 3.6x was lower than other players’ except Exelon (EXC) at 3.1x. This means NEE generates higher EBITDA per unit of debt despite being more leveraged than some of its peers.

NextEra Energy is part of Vanguard Dividend Appreciation ETF (VIG). It accounts for 1.15% of the fund’s total holdings.

NextEra Energy’s liquidity

NextEra Energy (NEE) had cash and cash equivalents of $551 million as of June 30, 2015. Plus, the company has access to revolving credit lines of $8.1 billion. After deducting short-term borrowings, NEE had net available liquidity of $6.7 billion as of June 30, 2015. Of that, $3.0 billion was available to Florida Power and Light (or FPL). The remaining $3.7 billion was available to other businesses, including NextEra Energy Resources (or NEER).

With investment-grade credit ratings from rating agencies, NEE is well positioned to raise funds from capital markets if needed.

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