Covanta floats price talk for $465M of add-on sustainability-linked notes

Covanta Holding Corp. has set price talk for a $465 million tap of its 4.875% sustainability-linked unsecured notes due December 2029 at 100.5-101, according to market sources. Books for the deal will close today at 2 p.m. ET, with terms expected thereafter via a Credit Suisse led-group.

Proceeds of the deal will support the tender for Covanta's $400 million of 6% senior notes due 2027. The company announced the tender for all or part of the issue today and intends to redeem any notes not tendered after settlement of the offer and consent solicitation expected Jan. 19. Credit Suisse is also dealer-manager on the tender.

Barclays, TD Securities and MUFG make up the full bookrunner group.

Covanta placed $300 million of 4.875% unsecured notes in November 2021 to support the group's EQT Infrastructure-backed buyout. The notes are non-callable until Dec. 1, 2024, up to when there is a 40% equity claw at 104.875. There is a change-of-control put at 101. The existing notes closed last night at 103.25 for a yield of 2.47%, according to data compiled by S&P Global Market Intelligence.

S&P Global Ratings today said, "[T]he proposed add-on and refinancing will modestly reduce interest expense while minimally increasing total funded debt." Its B+ rating on the company and positive outlook as well as the BB secured debt and B unsecured debt grades are unchanged by the transaction. The company is rated Ba3 at Moody's, with a B1 unsecured debt rating.

Covanta provides sustainable waste and energy solutions.