The bank debt for Calpine Construction Finance Company II (CCFC II), now known as Calpine Generating Co., slumped to the 95 1/2-96 3/4 range following Calpine Corp.'s decision to pull a $2.3 billion loan and bond deal to refinance the credit. More than $30 million of the paper is believed to have changed hands since the announcement.
The existing CCFC II bank debt had been climbing up toward par with the expectation that the paper would be taken out. The name had previously traded into the 98 1/2 range.
There is a camp among loan players that believes Calpine will be able to return to the market to get a new deal completed in the near future. The company was trying to get too much done, too fast, noted one loan trader. "It was starting to cost [Calpine] too much money," he added.
The new deal, led by Deutsche Bank, was set to include $1.3 billion of non-recourse first-lien term loans and $1 billion of second-lien notes. Price talk on the loan was LIBOR plus 4 1/4% when the deal was launched. It could not be ascertained how much in commitments had come in on the loan portion. Reportedly, there were issues relating to the covenants on the note issue and disputes over the collateral. A Deutsche Bank spokesman declined comment.
The company said in a written statement that it is considering alternative financing options and "remains confident" that it will be able be able to refinance the credit, which had about $2.17 billion outstanding at the end of September, prior to its maturity date in November. Calls to Rick Barraza, Calpine's senior v.p. of investor relations were not returned immediately.