devon-spurgeon

By Pierre Paulden and Richard Bravo Dec. 7 (Bloomberg) — Citadel Securities is arranging its first loan for a corporate borrower as the investment banking division of Citadel Investment Group LLC builds a credit business, according to people familiar with the situation. Targa Resources Inc., a Houston-based gas-pipeline company, selected Citadel, alongside Deutsche Bank AG and Credit Suisse Group AG, to arrange credit facilities of as much as $700 million, according to the people, who declined to be identified as the loan hasn’t closed. Ken Griffin , who founded Chicago-based Citadel in 1990 at the age of 23, started an investment-banking firm last year to diversify from its $13 billion hedge-fund business. Leveraged- loan sales have risen as the market has rebounded 47.1 percent from a record 28.1 percent decline in 2008 amid the failure of Lehman Brothers Holdings Inc. and a seizure in credit markets. Devon Spurgeon, a spokeswoman for Citadel declined to comment. Matt Meloy , a vice president for finance and treasurer for Targa, didn’t return a call. Banks have arranged $41 billion of leveraged loans since September, more than in each of the previous three quarters, Bloomberg data show. High-yield, high-risk debt is rated below Baa3 by Moody’s Investors Service and BBB- by Standard & Poor’s. Loans are repaid first in bankruptcy, before bonds and equities. Revolving Loan Citadel hired Mike Weir , a loan trader at Morgan Stanley, in October for its credit business. That month, Patrik Edsparr was named to run the securities firm. In November, Citadel underwrote its first benchmark bond offering, a $500 million issue for Advanced Micro Devices Inc. The Targa bank debt will include a $150 million revolving loan due 2014 and a term loan due 2016, the company said in a Dec. 4 statement. The term loan could be as large as $550 million, with proceeds used in part to refinance Targa’s 8.5 percent senior unsecured notes due in 2013, according to the statement. The remaining proceeds will also be used to repay the existing balance on its senior secured term loan due 2012 and to purchase a portion of parent company Targa Resources Investments Inc.’s loan facility due 2015, the statement said. The company is rated Ba3, the third-highest speculative grade, by Moody’s. To contact the reporters on this story: Pierre Paulden in New York at ppaulden@bloomberg.net ; Richard Bravo in New York at rbravo5@bloomberg.net