Barclays To Launch Bonds For North American Energy Alliance
June 26, 2008
Barclays in two weeks will issue $325 million in senior secured notes due 2016 for North American Energy Alliance, a source close to the deal said.
The banks last week syndicated a $545 million credit facility consisting of a $40 million revolver, an $80 million letter of credit and a $425 million term loan A at Libor plus 275.
The proceeds from the debt will help fund Canadian energy provider NAEA’s acquisition of six power plants from Consolidated Edison.
S&P has rated the debt BB+ and the company B+. The ratings reflect the company’s weak diversification in the Northeast, sensitivity to market fluctuations and the possibility that the power plants could lose significant value in the coming decades.
These negative implications are offset by NAEA’s strong margins and cash flow. S&P has assigned a recovery rating to the debt that anticipates a 90% to 100% retrieval of principal in the event of a default.
Moody’s Investors Service has assigned a Ba1 rating to the bank loans and a Ba3 rating to the bonds. The ratings reflect the high proportion of cash flow that is either contracted or hedged with creditworthy counterparties and the rapid deleveraging of the first-lien term facilities, Moody’s analysts said in a report.
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