Published on 1/9/2019 in the Prospect News Investment Grade Daily.
New Issue: Energy Transfer details $4 billion of notes sold in three parts
By Devika Patel
Knoxville, Tenn., Jan. 9 – Energy Transfer Operating LP offered further details about a $4 billion sale of senior notes (Baa3/BBB-/BBB-) that priced in three tranches on the tight side of guidance and better than initial talk on Tuesday, according to an FWP filed with the Securities and Exchange Commission.
The company sold $750 million of 4.5% notes due April 15, 2024 at a spread of 200 basis points over Treasuries. These notes priced at 99.646 to yield 4.578%.
A $1.5 billion tranche of 5.25% notes due April 15, 2029 priced with a Treasuries plus 255 bps spread. These notes priced at 99.789 to yield 5.278%.
Energy Transfer sold $1.75 billion of 6.25% 30-year notes at a 325 bps over Treasuries spread. These notes priced at 99.85 to yield 6.262%.
The company dropped an initially planned offering of notes due April 15, 2021 from the final deal.
BofA Merrill Lynch, Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, RBC Capital Markets LLC, SunTrust Robinson Humphrey Inc., Barclays, CIBC World Markets Corp., Citigroup Global Markets Inc., Credit Agricole Securities (USA) Inc., J.P. Morgan Securities LLC, Mizuho Securities USA Inc., MUFG, Natixis Securities Americas LLC, PNC Capital Markets LLC, Scotia Capital (USA) Inc., SMBC Nikko Securities America, Inc., TD Securities (USA) LLC, U.S. Bancorp Investments Inc. and Wells Fargo Securities LLC were the bookrunners.
Proceeds will be used to repay a $1.22 billion term loan due Feb. 2, 2024, the company’s 9.7% senior notes due March 15, 2019, its 9% senior notes due April 15, 2019, a subsidiary’s 8.125% senior notes due June 1, 2019 and a portion of the borrowings under the company’s revolving credit facility and for general partnership purposes.
Energy Transfer is a natural gas midstream and intrastate transportation and storage company based in Dallas.
| Issuer: | Energy Transfer Operating LP
|
| Amount: | $4 billion
|
| Description: | Senior notes
|
| Bookrunners: | BofA Merrill Lynch, Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, RBC Capital Markets LLC, SunTrust Robinson Humphrey Inc., Barclays, CIBC World Markets Corp., Citigroup Global Markets Inc., Credit Agricole Securities (USA) Inc., J.P. Morgan Securities LLC, Mizuho Securities USA Inc., MUFG, Natixis Securities Americas LLC, PNC Capital Markets LLC, Scotia Capital (USA) Inc., SMBC Nikko Securities America, Inc., TD Securities (USA) LLC, U.S. Bancorp Investments Inc. and Wells Fargo Securities LLC
|
| Co-managers: | BBVA Securities Inc., BMO Capital Markets Corp., Credit Suisse Securities (USA) LLC, Fifth Third Securities Inc., HSBC Securities (USA) Inc. and Morgan Stanley & Co. LLC
|
| Trade date: | Jan. 8
|
| Settlement date: | Jan. 15
|
| Ratings: | Moody’s: Baa3
|
| S&P: BBB-
|
| Fitch: BBB-
|
| Distribution: | SEC registered
|
|
|
| Five-year notes
|
| Amount: | $750 million
|
| Maturity: | April 15, 2024
|
| Coupon: | 4.5%
|
| Price: | 99.646
|
| Yield: | 4.578%
|
| Spread: | Treasuries plus 200 bps
|
| Call: | Make-whole call at Treasuries plus 30 bps until March 15, 2024, then a par call
|
| Price guidance: | Treasuries plus 205 bps area, plus or minus 5 bps; initial talk at Treasuries plus 230 bps area
|
|
|
| 10-year notes
|
| Amount: | $1.5 billion
|
| Maturity: | April 15, 2029
|
| Coupon: | 5.25%
|
| Price: | 99.789
|
| Yield: | 5.278%
|
| Spread: | Treasuries plus 255 bps
|
| Call: | Make-whole call at Treasuries plus 40 bps until Jan. 15, 2029, then a par call
|
| Price guidance: | Treasuries plus 260 bps area, plus or minus 5 bps; initial talk at Treasuries plus 280 bps area
|
|
|
| 30-year notes
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| Amount: | $1.75 billion
|
| Maturity: | April 15, 2049
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| Coupon: | 6.25%
|
| Price: | 99.85
|
| Yield: | 6.262%
|
| Spread: | Treasuries plus 325 bps
|
| Call: | Make-whole call at Treasuries plus 50 bps until Oct. 15, 2048, then a par call
|
| Price guidance: | Treasuries plus 330 bps area, plus or minus 5 bps; initial talk at Treasuries plus 355 bps area
|
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