By Mary-Katherine Stinson and Cristal Cody
Lexington, Ky., Sept. 27 – Constellation Energy Generation LLC priced two tranches of fixed-rate senior notes (Baa2/BBB) totaling $1.4 billion on Tuesday, according to an FWP filed with the Securities and Exchange Commission and details from a market source.
The $500 million of 6.125% senior notes due Jan. 15, 2034 priced at 99.913 to yield 6.138%, or at Treasuries plus 158 basis points. Price talk was in the Treasuries plus 185 bps area.
The $900 million of 6.5% senior notes due Oct. 1, 2053 priced at 99.96 to yield 6.503%, or at 180 bps above Treasuries, tighter than talk in the 210 bps area.
The 2034 notes can be redeemed at any time prior to Oct. 15, 2033, three months prior to maturity, at a make whole price of Treasuries plus 25 bps, and then after at par.
The 2053 notes feature a make-whole call before April 1, 2053 at Treasuries plus 30 bps, and then the last six months are callable at par.
BofA Securities, Inc., Citigroup Global Markets Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, RBC Capital Markets, LLC, MUFG Securities Americas Inc. and PNC Capital Markets LLC are the bookrunners.
Proceeds will be used to fund a portion of the purchase price of Constellation’s acquisition of NRG South Texas, LP and to pay certain fees and expenses relating to the acquisition. Subject to the terms of the equity purchase agreement, the purchase price is $1.75 billion, with an effective purchase price of $1.4 billion net of the present value of future tax benefits to Constellation. The transaction will be financed with a combination of cash and debt, and the deal is expected to be completed by year-end, following regulatory approval.
The remainder of the proceeds will be used for general corporate purposes.
Formerly Exelon Generation Co., LLC, Constellation Energy Generation is a subsidiary of Constellation Energy Corp., a power generation and customer-facing energy business based in Kennett Square, Pa.
| Issuer: | Constellation Energy Generation LLC
|
| Amount: | $1.4 billion
|
| Issue: | Senior notes
|
| Bookrunners: | BofA Securities, Inc., Citigroup Global Markets Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, RBC Capital Markets, LLC, MUFG Securities Americas Inc. and PNC Capital Markets LLC
|
| Co-managers: | Loop Capital Markets LLC and Roberts & Ryan, Inc.
|
| Trustee: | U.S. Bank Trust Co., NA
|
| Counsel to issuer: | Ballard Spahr LLP
|
| Counsel to underwriters: | Winston & Strawn LLP
|
| Trade date: | Sept. 26
|
| Settlement date: | Sept. 29
|
| Ratings: | Moody’s: Baa2
|
| S&P: BBB
|
|
|
| 2034 notes
|
| Amount: | $500 million
|
| Maturity: | Jan. 15, 2034
|
| Coupon: | 6.125%
|
| Price: | 99.913
|
| Yield: | 6.138%
|
| Spread: | Treasuries plus 158 bps
|
| Call features: | At a make-whole premium of 25 bps before Oct. 15, 2033; after at par
|
| Price talk: | Treasuries plus 185 bps area
|
| Cusip: | 210385AD2
|
|
|
| 2053 notes
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| Amount: | $900 million
|
| Maturity: | Oct. 1, 2053
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| Coupon: | 6.5%
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| Price: | 99.96
|
| Yield: | 6.503%
|
| Spread: | Treasuries plus 180 bps
|
| Call features: | At a make-whole premium of 30 bps before April 1, 2053; after at par
|
| Price talk: | Treasuries plus 210 bps area
|
| Cusip: | 210385AE0
|
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