Published on 1/8/2020 in the Prospect News Investment Grade Daily and Prospect News Preferred Stock Daily.
New Issue: Energy Transfer sells $1.6 billion $1,000-par cumulative preferreds in two series
By James McCandless
San Antonio, Jan. 8 – Energy Transfer Operating, LP priced a combined $1.6 billion offering of $1,000-par series F and series G fixed-rate reset cumulative redeemable perpetual preferred units (Baa2/BB/BB) on Tuesday, according to an FWP filing with the Securities and Exchange Commission.
There is no greenshoe.
The series F preferreds were sold for $500 million and carry an initial dividend of 6.75%, which resets every five years to the five-year Treasury rate plus 513.4 basis points.
The series G preferreds were sold for $1.1 billion and have an initial dividend of 7.125%, which resets every five years at the five-year Treasury rate plus 530.6 bps.
Citigroup Global Markets Inc., Deutsche Bank Securities Inc., MUFG, Natixis Securities Americas LLC and TD Securities (USA) LLC are the joint bookrunners.
Both of the preferreds are redeemable on May 25, 2025 and every five years thereafter at par. Prior to that, the preferreds are redeemable 120 days after a ratings event at $1,020.
Energy Transfer plans to use the proceeds to repay certain outstanding debt, including prepayment of certain senior debt, and for general partnership purposes.
The company does not plan to list either series on any securities exchange.
Energy Transfer is a Dallas-based oil and gas pipeline company.
| Issuer: | Energy Transfer Operating, LP
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| Amount: | $1.6 billion
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| Bookrunners: | Citigroup Global Markets Inc., Deutsche Bank Securities Inc., MUFG, Natixis Securities Americas LLC and TD Securities (USA) LLC
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| Co-managers: | Barclays, BBVA Securities Inc., BMO Capital Markets Corp., BofA Securities, Inc., CIBC World Markets Corp., Credit Agricole Securities (USA) Inc., Credit Suisse Securities (USA) LLC, Fifth Third Securities, Inc., Goldman Sachs & Co. LLC, HSBC Securities (USA) Inc., J.P. Morgan Securities LLC, Mizuho Securities USA LLC, Morgan Stanley & Co. LLC, PNC Capital Markets LLC, RBC Capital Markets, LLC, Scotia Capital (USA) Inc., SMBC Nikko Securities America, Inc., SunTrust Robinson Humphrey, Inc., U.S. Bancorp Investments, Inc. and Wells Fargo Securities, LLC
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| Pricing date: | Jan. 7
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| Settlement date: | Jan. 22
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| Ratings: | Moody’s: Baa2
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| S&P: BB
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| Fitch: BB
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| Distribution: | SEC registered
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| Series F
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| Issuer: | Energy Transfer Operating, LP
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| Description: | Series F fixed-rate reset cumulative redeemable perpetual preferred units
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| Amount: | $500 million
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| Maturity: | Perpetual
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| Dividend: | 6.75% initially; resets every five years to the five-year Treasury rate plus 513.4 bps
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| Price: | Par of $1,000
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| Call: | May 25, 2025 and every five years thereafter at par; prior to that, within 120 days after a ratings event at 102%
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| Series G
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| Issuer: | Energy Transfer Operating, LP
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| Description: | Series G fixed-rate reset cumulative redeemable perpetual preferred units
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| Amount: | $1.1 billion
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| Maturity: | Perpetual
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| Dividend: | 7.125% initially; resets every five years to the five-year Treasury rate plus 530.6 bps
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| Price: | Par of $1,000
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| Call: | May 25, 2025 and every five years thereafter at par; prior to that, within 120 days after a ratings event at 102%
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