By William Gullotti and Cristal Cody
Buffalo, N.Y., June 9 – Vistra Corp. subsidiary Palomino Funding Trust I priced $450 million of 7.233% pre-capitalized trust securities due 2028 (P-Caps) (Baa3/BB/BBB-) on Thursday, according to an 8-K filing with the Securities and Exchange Commission and additional information provided by a market source.
The P-Caps priced with a spread of 337.5 basis points over Treasuries, tight to initial talk in the Treasuries plus 350 bps area.
Credit Suisse Securities (USA) LLC, BNP Paribas Securities Corp., Credit Agricole CIB, J.P. Morgan Securities LLC and Truist Securities Inc. are the bookrunners.
Fixed income investor calls were held Tuesday for the 3c7 and Rule 144A transaction, which is expected to close on June 15.
Proceeds of the benchmark offering will be invested in a portfolio of U.S. Treasury securities, and the newly formed trust will enter into a facility agreement with Vistra Operations Co. LLC. Under the agreement the Vistra Operations will pay a periodic fee to the trust, with the Vistra Operations also issuing senior secured notes due 2028 in consideration for the eligible assets of the trust.
The LLC will not receive any proceeds directly from the offering of the P-Caps.
“The P-Caps have a credit quality on par with Vistra's senior secured notes with fall-away security provisions. The main reason supporting the strong linkage is that if, for any reason, the trust does not have adequate funds to pay interest and principal on the P-Caps, Vistra is contractually required under the facility agreement to either fund the payment obligation itself in the form of a substitute payment or through the delivery of senior secured notes with fall-away provisions to the trust,” Moody’s Investors Service said in a press release.
The issue is related to Vistra’s pending acquisition of Energy Harbor Corp., a privately held energy producer and retailer, based in Akron, Ohio.
Vistra is an integrated retail electricity and power generation company based in Irving, Tex.
| Issuer: | Palomino Funding Trust I
|
| Amount: | $450 million
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| Issue: | Pre-capitalized trust securities
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| Maturity: | May 17, 2028
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| Bookrunners: | Credit Suisse Securities (USA) LLC, BNP Paribas Securities Corp., Credit Agricole CIB, J.P. Morgan Securities LLC and Truist Securities Inc.
|
| Coupon: | 7.233%
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| Spread: | Treasuries plus 337.5 bps
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| Trade date: | June 8
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| Settlement date: | June 15
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| Ratings: | Moody’s: Baa3
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| S&P: BB
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| Fitch: BBB-
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| Distribution: | Rule 144A and 3c7
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| Initial talk: | Treasuries plus 350 bps area
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