Calpine Construction Finance Company's (CCFC I) $750 million of new debt has been trading at premium levels in the secondary loan market. Market players said the first-lien term loan was trading above the 102 level and the second-lien floating-rate note (FRN) was trading in the 99-991/2 range last week. The term loan has ticked up from the 991/2 to par range and the FRN has risen from the 981/4 - 983/4 context, where the debt was trading the day the credit broke. Both pieces were issued at 98. "We are really happy with the way that it turned out," said one buysider. "I think Goldman [Sachs, the lead arranger for the deal,] was extremely sensitive to investors' needs and demands."
The deal is priced in two tranches: a first lien, $385 million, six-year term loan priced at LIBOR plus 6% with a 11/2% LIBOR floor and a second lien, $365 million, eight-year FRN priced at LIBOR plus 81/2% with a 11/4% LIBOR floor. There is four-year non-call provision on the first-lien loan and a six-year non-call provision on the FRN. Goldman also put a six-year spark spread hedge into the deal. "We felt like we had to have a bullet-proof structure from a credit point of view," Steve Hickey, head of Goldman's U.S. loan trading team, said regarding the hedge.
Goldman priced CCFC I in a week where comparable energy credits such as Dynegy and AES Corp. saw a four-point drop in the trading levels for their debt. Following the news that Goldman completed the CCFC I deal, the price for Calpine Corp.'s second-lien term loan and the FRN jumped about four points in the secondary market to the 91 range and the senior secured notes rose about five points to the 893/4 context, Hickey added. Calpine Corp.'s second-lien term loan recovered even farther to the 931/2 941/2 range last week.