Talen Energy Supply priced a senior secured note offering and launched a term loan B into syndication last week, a month after its most recent foray into the high yield bond market.
The independent power producer priced a $470 million nine-year senior secured bond at a 6.625% coupon on June 21. The offering is expected to close on July 8.
JP Morgan led on the bond deal, flanked by joint leads Citi, Credit Suisse, Goldman Sachs and Morgan Stanley. Barclays and Riverstone Capital Services were co-managers.
Talen had already dipped into the bond market in May when it increased the size of a proposed $500 million eight-year senior secured offering to $750 million and priced it with a 7.25% coupon on May 8 (PFR, 5/10).
JP Morgan is also left lead on Talen's $500 million seven-year term loan B, which went into syndication on June 21. The loan is expected to close on July 8 in tandem with the high yield offering.
Pricing on the loan is expected to emerge by the end of this week. Both the loan and the bond will be secured on the same pool of assets as Talen Corp.'s other secured debt.
Bookrunners on the term loan B include Deutsche Bank, MUFG, Morgan Stanley, Natixis and RBC, PFR has learned.
Talen intends to use the proceeds from the two debt raises to repay in full its existing term loans B-1 and B-2.
A credit opinion published by Moody’s Investors Service on June 21 noted the diversification of Talen's portfolio and “operational improvements” as a credit positive to weigh against “the inherent volatility of the merchant power markets in which it operates and its relatively leveraged capital structure.”
“Since the December 2016 closing of the take-private merger with Riverstone, Talen’s management has been increasingly focused on reducing costs and improving operational efficiencies,” wrote Moody’s analysts. “For example, the company has been able to reduce headcount and contractor spending, renegotiate fuel contracts and property tax payments, lower fixed costs by revising plant operating schedules, and successfully conclude a new 5-year labor agreement.”
Talen's senior secured ratings with Moody's and S&P Global Ratings are Ba3 and BB.