Published on 10/17/2022 in the Prospect News Investment Grade Daily.
New Issue: Diamondback Energy sells $1.1 billion 6.25% notes due 2033
Chicago, Oct. 17 – Diamondback Energy Inc. priced $1.1 billion of 6.25% senior notes due March 15, 2033 (Baa3/BBB-/BBB) on Monday, according to an FWP filing with the Securities and Exchange Commission.
The notes priced at 99.572 to yield 6.308%, or at a 230 basis point spread to the benchmark Treasury.
The notes are callable with a Treasuries plus 35 bps make-whole premium until the par call date, Dec. 15, 2032.
BofA Securities, Inc., Barclays and Scotia Capital (USA) Inc. are the joint bookrunners.
Capital One Securities, Inc., Goldman Sachs & Co. LLC, TD Securities (USA) LLC and Wells Fargo Securities, LLC are the passive bookrunners.
Proceeds will be used to fund the full redemption of Rattler Midstream’s 5.625% senior notes due 2025, which totaled $500 million outstanding as of Oct. 7. Proceeds will also be used for general corporate purposes, including paying a portion of the cash consideration for the company’s previously announced pending acquisition of FireBird Energy LLC in the Midland Basin.
As previously reported, Diamondback Energy will be exchanging 5.86 million shares of common stock and paying $775 million in cash for all leasehold interest and related assets of FireBird. The cash outlay at closing is expected to be approximately $700 million due to the expected free cash flow to be generated on the asset between the effective date and expected closing date late in the fourth quarter of 2022.
Diamondback is a Midland, Tex.-based oil and natural gas company.
| Issuer: | Diamondback Energy Inc.
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| Amount: | $1.1 billion
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| Issue: | Senior notes
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| Maturity: | March 15, 2033
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| Bookrunners: | BofA Securities, Inc., Barclays, Scotia Capital (USA) Inc., Capital One Securities, Inc., Goldman Sachs & Co. LLC, TD Securities (USA) LLC and Wells Fargo Securities, LLC
|
| Co-managers: | Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, PNC Capital Markets LLC, RBC Capital Markets, LLC, Truist Securities, Inc., U.S. Bancorp Investments, Inc., BOK Financial Securities, Inc. and Comerica Securities, Inc.
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| Trustee: | Computershare Trust Co., NA
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| Counsel to issuer: | Akin Gump Strauss Hauer & Feld LLP
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| Counsel to underwriters: | Latham & Watkins LLP
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| Coupon: | 6.25%
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| Price: | 99.572
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| Yield: | 6.308%
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| Spread: | Treasuries plus 230 bps
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| Call features: | Make-whole call at Treasuries plus 35 bps until Dec. 15, 2032; par call thereafter
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| Trade date: | Oct. 17
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| Settlement date: | Oct. 28
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| Ratings: | Moody’s: Baa3
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| S&P: BBB-
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| Fitch: BBB
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| Distribution: | SEC registered
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| Cusip: | 25278XAV1
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