Goldman Sachs allocated the $750 million second priority term loan for Calpine Corp. late last week in conjunction with its $3.3 billion debt package. The entire bond and bank deal was increased from an initially planned $1.8 billion after receiving red hot reception in the debt markets. A banker familiar with the loan said over 100 investors came into the term loan from all corners of the market. The four-year loan and $500 million of four-year floating-rate notes were both priced at LIBOR plus 53/4%. Calpine also priced $1.15 billion of 81/2% fixed-rate senior secured notes due 2010 and $900 million of 83/4% senior secured notes due 2013.
"[This is] the biggest second lien term loan that's ever been done," the banker claimed, adding that at $2.55 billion, the bond package is the biggest high-yield deal of the year so far. It was completed in under two weeks, he added. The term piece is the first loan that has not traded up significantly, an investor pointed out, stating that the large size of the loan has more people holding onto the paper. "It's hovering right around par," he said. Proceeds from the transaction will go toward repaying $950 million of Calpine's "B" piece and $450 million of the company's revolver (LMW, 6/30). A Calpine official confirmed the deal structure.