Talen Energy talks $500 million eight-year notes to yield 7¼%-7½%; pricing Wednesday

By Paul A. Harris

Portland, Ore., May 8 – Talen Energy Supply LLC talked its $500 million offering of eight-year senior secured notes (S&P: BB) to yield 7¼% to 7½%, in line with early guidance in the low-to-mid 7% area, according market sources.

The deal was heard to be playing to $700 million of orders early Wednesday morning, a trader said.

Books close at noon ET on Wednesday, and the deal is expected to price later on Wednesday.

Credit Suisse Securities (USA) LLC is the left lead bookrunner for the Rule 144A and Regulation S offering. Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC and MUFG are the joint bookrunners.

Barclays, RBC Capital Markets LLC and Riverstone are the co-managers.

The notes become callable after three years at par plus 50% of the coupon and feature a three-year 35% equity clawback and a 101% poison put.

The Woodlands, Tex.-based power generation and energy company plans to use the proceeds to fund the tender offers for its senior notes due 2021, its senior guaranteed notes due 2022 and its senior guaranteed notes due 2024.

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