Cheniere seeks up to $11.5B in debt to fund Corpus LNG project

By MATT ROBINSON
Bloomberg

Cheniere Energy is planning to raise as much as $11.5 billion of debt to help fund construction of its Corpus Christi, Texas, facility to export natural gas from booming US shale production.

The Houston-based company has tapped 18 banks to arrange the financing, including Bank of America, Goldman Sachs and JPMorgan Chase, according to a statement today. The company estimates the project will cost about $11.5 billion to $12 billion and will be funded with a combination of debt and equity.

Cheniere, which liquefies natural gas so that it can be sent overseas in ships, collects fees to transport the commodity that has gotten a boost from advances in drilling technologies. US output reached a record 66.7 billion cubic feet/day last year.

The Corpus Christi facility would be the company’s second project, after Sabine Pass in Louisiana.

“We have now received the equity and debt commitments needed to support the financing of the Corpus Christi liquefaction project,” Charif Souki, CEO of Cheniere, said in the statement. We “expect to commence construction in early 2015.”

Cheniere’s bonds yield an average of 6%, below the 9.6% borrowing cost of the Bank of America Merrill Lynch US High Yield Energy index, of which it’s the largest constituent. One of its loan facilities pays a range of 2.3 percentage points to 3 percentage points more than the London interbank offered rate, according to a Oct. 30 regulatory filing.

Cheniere’s Sabine Pass unit’s $1.48 billion of 7.5%, first-lien notes due November 2016 traded at 102.8 cents on the dollar today to yield 5.97%, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

Sabine Pass is set to start production by the end of 2015. By cooling the gas to minus 270 degrees Fahrenheit, it can be reduced to a liquid state for shipment overseas by tankers.

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