Chesapeake Energy Increased Planned Bond Sale - Source
January 28 2009 - 2:32PM
Dow Jones News
Chesapeake Energy Corp. (CHK) has doubled the size of its
planned sale of junk bonds, taking the size of the deal to $1
billion, according to one investor looking at the transaction.
The deal was raised from the initial target of $500 million
thanks to strong interest from investors, the investor said.
Chesapeake is expected to sell the bonds at a discount to par
value to give a coupon of 9.5% and a 10.5%-10.75% yield, the
investor said.
In a note to clients earlier Wednesday, analysts at KDP
Investment Advisors said they wouldn't be surprised if the deal got
upsized given the recent strength of the new issue market.
Chesapeake is one of three speculative-grade companies looking
to raise debt in the junk bond market Wednesday as they capitalize
on improved demand to raise cash to repay debt and fund their
operations. Also on offer, is $200 million of bonds apiece from
both Intelsat and Inergy Lp (NRGY).
Chesapeake is a well-known name in the junk bond universe. It
was last in the market in May 2008 when it sold $800 million of
7.25% bonds, according to Standard & Poor's. These bonds trade
at around 85 cents on the dollar, MarketAxess shows.
Proceeds of the deal will be used to repay a portion of the
firm's revolving credit facility. As of Monday, the outstanding
balance on Chesapeake's revolver was $3.45 billion, according to
Standard & Poor's Leveraged Commentary & Data.
The deal is expected to price later Wednesday through lead
managers Deutsche Bank, Banc of America, Credit Suisse, Goldman
Sachs, Morgan Stanley and Wachovia.
-By Kate Haywood, Dow Jones Newswires; 201-938-2348;
kate.haywood@dowjones.com
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