Cheniere Energy closed its term loan "B" construction funding, boosting what had been a $500 million loan by $100 million and slashing pricing. Given the dearth of activity during the dog days of summer, the Credit Suisse First Boston-led deal drew strong interest. The deal is priced at LIBOR plus 2 3 /4% and was snapped up by more than 40 institutional investors, such as pensions and insurance companies. David Castaneda, investor relations manager at the LNG developer in Houston, did not return a call for comment
Standard & Poor's gave the credit a BB rating. Many loan deals garnering a BB rating have recently been priced about 75 basis points cheaper, but observers noted the higher rates reflect the fact that the to-be-constructed liquefied natural gas projects related to the debt will not see revenues for three to four years. The loan is callable at 101-102, noted one banker. Officials at CSFB declined to comment. An earlier deal for Cheniere by CSFB was scuppered by the capital market reaction to the General Motors Corp. rating slide.
The loan will be used to help fund Gulf of Mexico LNG projects including Sabine Pass in Louisiana, which is not expected to be significantly impacted by Hurricane Katrina because construction has not commenced. Under construction is a LNG project in Freeport, Texas. Cheniere has filed for permission to expand both capacities at the facilities from original plans, asking that the Freeport facility be expanded from 1.5 billion cubic feet a day to 4 bcf/day and the Sabine Pass project be expanded from 2.6 bcf/day to 4 bcf/day.