Targa Resources Corp. (NYSE: TRGP) is set to offer $1.5 billion of debt in the first high-yield bond deal since November, the Houston-based midstream company said in a Jan. 10 press release.

Targa had initially planned to offer a $750 million bond with an 8½-year maturity but later upsized the offering due to strong investor demand, adding a $750 million, 10-year tranche, according to a report by the Financial Times citing people familiar with the deal.

The Financial Times report noted there had been no new sales of high-yield bonds for 41 days, which, according to records from data company Dealogic dating back to 1995, marked the longest drought on record.

Proceeds from the $1.5 billion debt offering will be used by Targa to redeem its outstanding 2019 notes in full, the company release said. Any remaining proceeds could also go toward paying down debt, funding working capital or other growth investments and acquisitions.

Targa Resources Asset Footprint (Source: Targa Resources Inc.)

Analysts with Capital One Securities also released an update on potential asset sales in the firm’s research note late last week which could provide additional capital for Targa’s 2019 capex.

The analysts said Targa had received “incremental interest” in its Bakken Badlands assets since the company’s third-quarter earnings call when management disclosed it was evaluating a potential minority interest sale.

“Targa will likely maintain control and continue operating the assets, but should the company sell close to a 50% interest, a deal could fetch roughly $1 billion for the Badlands assets, which generate roughly $200 million of EBITDA annually,” the Capital One analysts said in a Jan. 4 note.

The analysts added they believe a deal for Targa’s Bakken Badlands assets could occur in the first half of 2019 and cover “a sizable portion” of the roughly $2 billion growth capex for 2019 the company announced in early November.

Additionally, Targa is no longer actively pursuing a sale of the Channelview Splitter, the analysts from Capital One said which they believe is due to potential bids coming below the company’s expected asset valuation.

Targa is one of the largest independent midstream energy companies in North America and owns, operates, acquires and develops a diversified portfolio of complementary midstream energy assets. The company’s gathering and processing assets are across multiple shale and natural resource plays, including the Permian Basin, Barnett Shale, Bakken Shale, Eagle Ford Shale, Anadarko Basin, Arkoma Basin, onshore Louisiana and the Gulf of Mexico, according to the Targa website.

Emily Patsy can be reached at epatsy@hartenergy.com.

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