Spectra Energy Partners Sells $1.9 Billion of Bonds

Spectra Energy Partners LP sold $1.9 billion of bonds in three parts to help fund the purchase of assets.

The company issued $500 million of 2.95 percent, five-year notes to yield 135 basis points more than similar-maturity Treasuries, $1 billion of 4.75 percent, 10.5-year debt at a relative yield of 190 basis points and $400 million of 5.95 percent, 30-year securities at a 205 basis-point spread, according to data compiled by Bloomberg.

Spectra Energy Partners will use proceeds from the offering to purchase assets from Spectra Energy Corp., according to a person with knowledge of the transaction who asked not to be identified, citing lack of authorization to speak publicly.

The new bonds are expected to be rated Baa3, the lowest level of investment grade, by Moody’s Investors Service, the person said. Bank of America Corp., JPMorgan Chase & Co., Morgan Stanley and Royal Bank of Canada managed the offering for the Houston-based company.

The gas distributor last sold dollar-denominated debt in February through its Spectra Energy Capital LLC subsidiary, issuing $650 million of 3.3 percent, 10-year debentures at a spread of 144 basis points, Bloomberg data show. The bonds traded at 87.34 cents on the dollar to yield 4.99 percent on Sept. 11, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

Transferring its assets to the master-limited partnership will help boost dividends, Spectra Energy Corp. said in a June 11 statement. An MLP doesn’t pay corporate income tax, leaving more cash for payments to investors.

(Corrects issuer name in first paragraph, proceeds details in third, in story published Sept. 16.)
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