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Enterprise Products Sells $2B Of Debt In Three Parts
Dow Jones, 11 May 2010

Enterprise Products Operating LLC sold $2 billion of debt Tuesday, essentially doubling the total volume for the entire month of May.

Just $1.82 billion in high-grade supply had been sold prior to the Enterprise issue, according to data provider Dealogic.

The $400 million five-year tranche was sold at a spread of 150 basis points over Treasurys while the $1 billion 10-year piece was priced at 170 basis points over Treasurys and the $600 million 30-year tranche at 205 basis points.

The deal had originally been structured with 10- and 30-year maturities, but a five-year piece was later added due to "investor interest," according to one of the syndicate managers working on the deal. The issue is guaranteed by Enterprise Products Partners L.P. (EPD).

Enterprise outstanding notes due April 1, 2013, were last quoted at 130 basis points over Treasurys, according to MarketAxess.

"Current market volatility is working against issuers who need to pay up to get deals done," said Richard Lee, managing director of fixed income at Wall Street Access. He said leverage has swung back to the investor as opposed to the borrower who had clearly taken advantage of cheap borrowing costs illustrated by the boon in bond supply earlier this year.

To be sure, unofficial price guidance on the Enterprise 10-year tranche was circulating at 150 basis points over Treasurys, but it ultimately landed at 170 basis points, underscoring an increase in cost for the borrower.

Proceeds will be used to temporarily reduce borrowings under the company's multi-year revolving credit facility, to repay outstanding amounts on the maturity of its $500 million principal amount of senior notes due June 2010, and for general partnership purposes.

The offering has been rated Baa3 by Moody's Investors Service and BBB- by Standard & Poor's. It will be sold Tuesday via active bookrunners Citigroup, RBS and Wells Fargo.


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