Dynegy to sell $500 million eight-year notes in Wednesday drive-by; yield whispered at 8%-8¼%

By Paul A. Harris

Portland, Ore., Oct. 5 – Dynegy Inc. plans to price a $500 million offering of senior notes due January 2025 (current ratings B3/B+) on Wednesday trailing a late-morning conference call with investors, market sources say.

The initial guidance has the deal coming to yield 8% to 8¼%.

Morgan Stanley & Co. LLC, Barclays, BofA Merrill Lynch, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Goldman Sachs & Co., J.P. Morgan Securities LLC, MUFG, RBC Capital Markets and UBS Investment Bank are the joint bookrunners for the Rule 144A and Regulation S for life offering.

The notes come with three years of call protection.

The Houston-based energy company plans to use the proceeds, together with proceeds from the sale of Dynegy's 50% stake in Elwood Energy, LLC, and cash on hand, to fund the Energy Capital Partners buyout and partially repay Dynegy’s tranche B-2 term loans.

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