By Paul A. Harris
Portland, Ore., April 28 – Talen Energy Supply, LLC priced an upsized $1.2 billion issue of seven-year senior secured notes (Ba3/BB/BB+) at par to yield 8 5/8% on Friday, according to market sources.
The issue size increased from $825 million.
The yield printed at the tight end of yield talk in the 8¾% area. Initial guidance was in the 8¾% to 9% area.
The deal underwent investor friendly covenant changes, which primarily bear upon how the company may disburse cash and incur additional debt.
On the heels of those covenant changes, orders for the bonds were heard to be around $3 billion, a trader said.
Late Friday the trader saw the new Talen 8 5/8% notes due June 2030 getting lifted at par ½ bid, 101 offered.
Citigroup Global Markets Inc. was the left physical bookrunner. Joint physical bookrunners were BMO Capital Markets Corp., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, RBC Capital Markets LLC, Credit Suisse Securities (USA) LLC, MUFG Securities Americas Inc., Morgan Stanley & Co. LLC and Barclays.
The Allentown, Pa.-based independent power producer plans to use the proceeds to fund the refinancing and termination of debt under the existing secured financing agreements, to add cash to the balance sheet of the company and its subsidiaries, and for general corporate purposes.
The incremental proceeds resulting from the upsizing of the deal will be used to reduce the equity rights offering to $1.4 billion from $1.55 billion. Some of the incremental proceeds will also be applied to transaction expenses.
| Issuer: | Talen Energy Supply, LLC
|
| Amount: | $1.2 billion
|
| Issue: | Senior secured notes
|
| Maturity: | June 1, 2030
|
| Left physical bookrunner: | Citigroup Global Markets Inc.
|
| Joint physical bookrunners: | BMO Capital Markets Corp., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, RBC Capital Markets LLC, Credit Suisse Securities (USA) LLC, MUFG Securities Americas Inc., Morgan Stanley & Co. LLC and Barclays
|
| Coupon: | 8 5/8%
|
| Price: | Par
|
| Yield: | 8 5/8%
|
| Spread: | 515 bps
|
| First call: | June 1, 2026 at 104.313
|
| Trade date: | April 28
|
| Settlement date: | May 12
|
| Ratings: | Moody’s: Ba3
|
| S&P: BB
|
| Fitch: BB+
|
| Distribution: | Rule 144A and Regulation S for life
|
| Price talk: | 8¾% area
|
| Marketing: | Roadshow
|
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