Enterprise Products Operating is shopping an SEC-registered, benchmark offering of three- and 30-year notes to refinance its revolving credit facilities, sources said. The long tranche will carry a par call six months prior to maturity. Active bookrunners are Barclays, Citi, and SunTrust, while passive bookrunners are BAML, Deutsche Bank, and Mizuho. The issue has an expected BBB/Baa2 profile.
Proceeds from today’s sale will be used to temporarily reduce borrowings under the company’s multiyear revolver, which was used to repay the $500 million outstanding on its 4.6% notes due Aug. 1, 2012, according to filings. As of Aug. 3, Enterprise had $1.615 billion outstanding under its revolver, which matures in September 2016, filings show. The remainder of the proceeds will be used for general corporate purposes.
The Houston, Texas-based company was last in the market in February, when it placed $750 million of 4.85% notes due August 2042 at T+175, or 4.9%. The issue was used to “temporarily” reduce borrowings under the company’s multiyear revolver due September 2016 – which was used to repay $490.5 million of senior notes due February 2012 and $9.5 million of TEPPCO senior notes due February 2012 – and for general purposes. The notes last traded on Friday at T+176, or 4.41%, according to MarketAxess.
Enterprise tapped the market twice last year. In January the issuer placed $750 million of 3.2% notes due February 2016 at T+120 and $750 million of 5.95% notes due 2041 at T+155. In August the company completed $650 million of 4.05% notes due February 2022 at T+200, or 4.08%, and $600 million of 5.7% notes due 2042 at T+225, or 5.71%.
The company is a subsidiary of Enterprise Products Partners, which provides a range of services to producers and consumers of natural gas and natural-gas liquids (NGL) in North America. It operates in four segments: pipelines, fractionation, processing, and octane enhancement.
Standard & Poor’s maintains a positive outlook on its rating. “The positive outlook reflects the possibility that we may raise ratings by one notch over the next 12 to 24 months if the current trajectory of credit trends continues. We could raise the ratings if the partnership continues to build scale, reduce its commodity price risk, and maintains a stronger financial profile with debt to EBITDA in the 3.5x-4x range depending on the level of commodity prices and volumes,” the agency said in ratings rationale published in February. At the time, S&P said it expects the company to maintain a consolidated-debt-to-EBITDA ratio of about 4.25x. – Gayatri Iyer