[Editor's note: A version of this story appears in the March 2020 edition of Oil and Gas Investor. Subscribe to the magazine here.]

Hopes of high yield in energy healing were dashed when the outbreak of the coronavirus occurred in China, driving debt markets back to a bifurcated status. The debt market door remains open for higher-rated issuers, but it slammed shut for lower-rated names, as WTI prices slumped from north of $60/bbl at year-end to barely $50/bbl by late January.

Fortunate were those that dashed through the door late last year, before fears emerged that crude demand was collapsing in China and elsewhere due to the coronavirus outbreak. Energy companies that managed to close high-yield deals saw, in several cases, their issues trade down to low double-digit discounts to par as sentiment in the energy sector swooned.

Range Resources Corp.’s senior notes, for example, were priced to yield 9.25% and traded down to yield about 12% by the end of January, according to Tudor, Pickering, Holt & Co.

Energy Transfer Operating LP (formerly Energy Transfer Partners) exemplified the higher-rated issuers’ access to inexpensive credit via three senior note offerings in early January—before the coronavirus news broke. It also closed two issues of perpetual preferred units.

In addition, Energy Transfer closed two issues of fixed-rate reset cumulative redeemable perpetual preferred units: 500,000 units yielding 6.75% (Series F) and 1.1 million units yielding 7.125% (Series G). Both series offered units of $1,000 apiece.

Enterprise Products Partners LP (NYSE: EPD) offered $3 billion of senior notes in three tranches: $1 billion of 2.8% notes due 2030 priced at 99.921% to yield 2.809%; $1 billion of 3.7% notes due 2051 priced at 99.413% to yield 3.732%; and $1 billion of 3.950% notes due 2060 priced at 99.36% to yield 3.982%. Proceeds are to repay maturing debt issues.

Source: Oil and Gas Investor

 Debt
 Company Exchange/
Symbol		  Headquarters Amount 
($MM)		 Comments
Energy Transfer Operating LP NYSE: ET Dallas $4,500  A subsidiary of Energy Transfer LP announced that it has priced a public offering of $1 billion aggregate principal amount of its 2.9% senior notes due 2025, $1.5 billion aggregate principal amount of its 3.75% senior notes due 2030 and $2 billion aggregate principal amount of its 5% senior notes due 2050, at a price of 99.924%, 99.843% and 99.914%, respectively, of their face value.
Western Midstream Partners LP NYSE: WES Houston $3,500  Announced that its wholly owned subsidiary, Western Midstream Operating LP, has priced an offering of $300 million in aggregate principal amount of floating rate senior notes due 2023; $1 billion in aggregate principal amount of 3.1% senior notes due 2025 at a price to the public of 99.962% of their face value; $1.2 billion in aggregate principal amount of 4.05% senior notes due 2030 at a price to the public of 99.90% of their face value; and $1 billion in aggregate principal amount of 5.25% senior notes due 2050 at a price to the public of 99.442% of their face value. Net proceeds from the offering are expected to be used to repay and terminate WES Operating’s $3 billion term loan credit facility. WES Operating will use the remaining net proceeds for general partnership purposes, including repayment of borrowings under its revolving credit facility. Barclays Capital Inc., Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and PNC Capital Markets LLC are acting as joint book-running managers for the offering.
Enterprise Products Partners LP  NYSE: EPD Houston $3,000  Announced that its operating subsidiary, Enterprise Products Operating LLC, priced a public offering of $3 billion aggregate principal amount of notes comprised of $1 billion principal amount of senior notes due Jan. 31, 2030; $1 billion principal amount of senior notes due Jan. 31, 2051; and $1 billion principal amount of senior notes due Jan. 31, 2060. Net proceeds of this offering will be used for the repayment of debt (including repayment of amounts outstanding under its commercial paper program and payment of $500 million principal amount of senior notes Q due January 2020 and $1 billion principal amount of senior notes Y due September 2020, at their respective maturities); and for general company purposes, including for organic growth capex. Senior notes AAA will be issued at 99.921% of their principal amount and will have a fixed-rate interest coupon of 2.8%. Senior notes BBB will be issued at 99.413% of their principal amount and will have a fixed-rate interest coupon of 3.7%. Senior notes CCC will be issued at 99.360% of their principal amount and will have a fixed-rate interest coupon of 3.95%. Citigroup Global Markets Inc., Barclays Capital Inc., SunTrust Robinson Humphrey Inc. and Wells Fargo Securities LLC acted as joint book-running managers for the offering.
 EQT Corp. NYSE: EQT Pittsburgh $3,000  Priced an offering of $1 billion in aggregate principal amount of its 6.125% senior notes due Feb. 1, 2025, and $750 million in aggregate principal amount of its 7% senior notes due Feb. 1, 2030. EQT expects to use the net proceeds from the sale of the notes to redeem all of its outstanding floating rate notes due 2020 and all of its outstanding 2% senior notes due 2020. The remaining proceeds will be used to repay or redeem other indebtedness of the company, including all or a portion of its outstanding 4.875% senior notes due 2021. BofA Securities Inc. and J.P. Morgan Securities LLC are acting as joint book-running managers for the offering.
Energy Transfer Operating LP NYSE: ET Dallas $1,600  Priced an underwritten public offering of 500,000 of its 6.75% Series F fixed-rate reset cumulative redeemable perpetual preferred units at a price of $1,000 each and 1.1 million of its 7.125% Series G fixed-rate reset cumulative redeemable perpetual preferred units at a price of $1,000 each. The offering of senior notes and the offering of preferred units are being conducted as separate offerings pursuant to separate prospectus supplements, and neither offering is contingent upon the other. The company intends to use the aggregate net proceeds of about $6.04 billion (before offering expenses) from both of the offerings to repay certain of its outstanding indebtedness, including prepayment of certain senior indebtedness, and for general partnership purposes. Citigroup Global Markets Inc., Deutsche Bank Securities Inc., MUFG Securities Americas Inc., Natixis Securities Americas LLC and TD Securities (USA) LLC are acting as joint book-running managers for both of the offerings.
PBF Energy Inc. NYSE: PBF Parsippany, N.J. $1,000 Priced $1 billion in aggregate principal amount of 6% senior unsecured notes due 2028 in a private offering. The notes will be co-issued by PBF Finance Corp., a wholly owned subsidiary of PBF Holding. PBF Holding intends to use the net proceeds from the offering to fund the redemption of its outstanding 7% senior notes due 2023 and for general corporate purposes, including to pay a portion of the cash consideration in the pending acquisition of the Martinez refinery and related logistics assets. The offering is not contingent on the completion of the Martinez acquisition.
Rockies Express Pipeline LLC N/A Leawood, Kan. $750 Offered $750 million of senior notes in two tranches: $400 million of 3.6% notes due 2025 at 99.88 to yield 3.626%; and $350 million of 4.8 notes due 2030 priced at 99.934 to yield 4.809%.

For more up-to-date information on the latest financings visit Hart Energy’s online database of new financings.

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