Cheniere Partners Announces Pricing of $1.2 Billion Senior Notes due 2034

Rhea-AI Summary

Cheniere Energy Partners, L.P. (NYSE: CQP) priced $1.2 billion Senior Notes due 2034 with an interest rate of 5.750% per year, maturing on August 15, 2034, issued at a price of 99.820% of par. Proceeds will be used to redeem part of the SPL 2025 Notes, ranking pari passu with existing senior notes at Cheniere Partners. The offering is not registered under the Securities Act of 1933.

Insights

Financial Analyst

The announcement of Cheniere Energy Partners regarding the pricing of their Senior Notes due in 2034 is primarily a corporate finance strategy, indicating a proactive approach to managing its debt portfolio. The interest rate of 5.750% on the new notes is a critical figure for investors to consider, as it reflects the cost of borrowing for the company and consequently impacts its financial leverage and interest expense. When comparing this rate to the current market conditions and rates offered by similar maturity debt instruments from other companies, investors can gauge the attractiveness of this issue. The pricing at 99.820% of par is also notable, suggesting a slight discount which may appeal to fixed-income investors looking for slightly higher yields. However, considering the close relationship between energy companies and commodity prices, the fluctuating environment of the energy sector should be a factor in evaluating the risk associated with these notes. The capital raised is intended to fund redemption of the senior secured notes due in 2025 from its subsidiary, which implies a refinancing strategy where the company is potentially aiming to take advantage of the current interest rate environment to reduce its cost of debt. It is also important for investors to consider the fact that the offer has not been registered under the Securities Act, limiting the pool of potential investors, which could affect the liquidity and marketability of these notes.

Credit Analyst

Cheniere Energy Partners has structured the debt to rank pari passu with its existing senior notes, meaning that these notes will have the same ranking and claim on assets as other debts without preference. This is a important detail for investors as it informs them of the credit risk associated with the debt. The creditworthiness of Cheniere will be of significant interest to bondholders since it impacts the perceived risk and, therefore, the yield demanded by investors. Analyzing the use of proceeds, which is the redemption of the SPL 2025 Notes, it suggests that this is a strategic move to manage the maturity profile of their debt and reduce potential refinancing risk. It's important to assess Cheniere's overall debt structure, including the liquidity position and cash flow generation capabilities, to understand the long-term sustainability of their debt and the likelihood of fulfilling their financial obligations. This issuance does not necessarily signal distress or immediate financial concern, but rather it reflects an active effort to optimize the capital structure. This proactive debt management can be viewed positively if it leads to interest savings and aligns with a robust overall financial strategy.

HOUSTON--(BUSINESS WIRE)-- Cheniere Energy Partners, L.P. (“Cheniere Partners”) (NYSE: CQP) announced today that it has priced its previously announced offering of Senior Notes due 2034 (the “CQP 2034 Notes”). The CQP 2034 Notes will bear interest at a rate of 5.750% per annum and will mature on August 15, 2034. The CQP 2034 Notes will be issued at a price equal to 99.820% of par. The closing of the offering is expected to occur on May 22, 2024.

Cheniere Partners intends to contribute the proceeds from the offering to its subsidiary, Sabine Pass Liquefaction, LLC, to be used to redeem a portion of the outstanding aggregate principal amount of its senior secured notes due 2025 (the “SPL 2025 Notes”). This press release does not constitute an offer to purchase or a solicitation of an offer to sell the SPL 2025 Notes or a notice of redemption under the indenture governing the SPL 2025 Notes. The CQP 2034 Notes will rank pari passu in right of payment with the existing senior notes at Cheniere Partners, including the senior notes due 2029, the senior notes due 2031, the senior notes due 2032 and the senior notes due 2033.

The offer of the CQP 2034 Notes has not been registered under the Securities Act of 1933, as amended (the “Securities Act”), and the CQP 2034 Notes may not be offered or sold in the United States absent registration under the Securities Act or an applicable exemption from the registration requirements of the Securities Act. This press release shall not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale of these securities would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

Forward-Looking Statements

This press release contains certain statements that may include “forward-looking statements.” All statements, other than statements of historical or present facts or conditions, included herein are “forward-looking statements.” Included among “forward-looking statements” are, among other things, (i) statements regarding Cheniere Partners’ financial and operational guidance, business strategy, plans and objectives, including the development, construction and operation of liquefaction facilities, (ii) statements regarding Cheniere Partners’ anticipated quarterly distributions and ability to make quarterly distributions at the base amount or any amount, (iii) statements regarding regulatory authorization and approval expectations, (iv) statements expressing beliefs and expectations regarding the development of Cheniere Partners’ LNG terminal and liquefaction business, (v) statements regarding the business operations and prospects of third-parties, (vi) statements regarding potential financing arrangements, (vii) statements regarding future discussions and entry into contracts, and (viii) statements relating to our goals, commitments and strategies in relation to environmental matters. Although Cheniere Partners believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Cheniere Partners’ actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in Cheniere Partners’ periodic reports that are filed with and available from the Securities and Exchange Commission. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Other than as required under the securities laws, Cheniere Partners does not assume a duty to update these forward-looking statements.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240508499994/en/

Investors

Randy Bhatia, 713-375-5479

Frances Smith, 713-375-5753

Media Relations

Eben Burnham-Snyder, 713-375-5764

Bernardo Fallas, 713-375-5593

Source: Cheniere Energy Partners, L.P.

FAQ

What is the purpose of Cheniere Partners' offering of Senior Notes due 2034?

Cheniere Partners priced $1.2 billion Senior Notes due 2034 to raise capital for its subsidiary, Sabine Pass Liquefaction, , to redeem a portion of the SPL 2025 Notes.

When will the closing of the offering of CQP 2034 Notes occur?

The closing of the offering is expected to happen on May 22, 2024.

How much interest will the CQP 2034 Notes bear per annum?

The CQP 2034 Notes will bear interest at a rate of 5.750% per year.

What is the price at which the CQP 2034 Notes will be issued?

The CQP 2034 Notes will be issued at a price equal to 99.820% of par.

Will the CQP 2034 Notes rank equally with existing senior notes at Cheniere Partners?

Yes, the CQP 2034 Notes will rank pari passu in right of payment with the current senior notes at Cheniere Partners.