Plaquemines LNG bond to price
Venture Global is preparing to a price a US$2.5bn, two-part 144A bond offering for Plaquemines LNG, proceeds of which will partially pay down the Louisiana export project's US$10.2bn loan.
The offering is rated Ba2/BB+/BB and will comprise 8.5-year and 10.5-year tranches. Bookrunning mangers are RBC, Deutsche Bank, Truist and Wells Fargo. Joint bookrunners are Loop Capital Markets, Mizuho, ING, JP Morgan, Bank of America, Scotiabank, SMBC Nikko, Goldman Sachs, MUFG, Santander, BBVA, ICBC and Natixis. Co-managers are Regions Bank, R Seelaus, Academy Securities and DZ Financial Markets.
The sponsor raised US$2.5bn in high-yield bonds in an April 144A offering for Plaquemines that was upsized from US$1.5bn. Final yields were 7.50% on the eight-year and 7.75% on the 10-year.
Plaquemines LNG has 20-year take-or-pay sale and purchase agreements for 19.7m tonnes per year. Construction is approximately 96% complete as of April 30, but all contingency funding has been used to cover construction costs, Fitch said. As of April, remaining construction costs and interest are approximately US$1.7bn. The funding shortfall will be covered from the sale of commissioning cargoes, which started in December and is estimated to generate proceeds that "significantly exceed the remaining funding requirement", according to Fitch.
Fitch's rating case stresses capacity, fuel use, gas prices, operating costs and refinancing rates and results in a minimum project life coverage ratio of 1.21x. The project is significantly exposed to the risk of rising interest rates, Fitch said. The new senior notes have bullet maturities and account for approximately 20% of the project's debt, including the bank loan and previously issued senior notes. The bank loan matures in 2029 and has limited amortisation before maturity. The project must hedge at least 75% of its variable rate exposure. The debt structure includes a senior debt coverage ratio test of 1.4x for additional debt issues and an equity distribution test of 1.2x for senior notes and 1.25x for the bank loan, Fitch said.
