ONEOK Partners, L.P. (OKS) announced that it has issued senior notes worth $1.25 billion. The current offering has three tranches. The first one consists of 5-year senior notes worth $425 million with coupon rate of 3.2%, the second series covers 10-year senior notes worth $425 million with coupon rate of 5.0% and the third comprises 30-year senior notes worth $400 million with coupon rate of 6.2%. The notes offering will close on Sep 12, 2013.
The net proceeds, after paying the underwriting discounts and commissions, of the total offering will be $1.24 billion. ONEOK Partners intends to utilize the proceeds to repay $1.2 billion due under its commercial paper program and use the rest for general partnership purposes.
ONEOK Partners issues senior notes and common units from time to time to accumulate funds for repaying its existing debts and for several corporate purposes. On Sep 2012, the partnership issued a total of $1.3 billion of senior notes in two tranches. ONEOK Partners used the net proceeds of the issue to repay the debts under the $1.2 billion-commercial paper program and utilized the rest for general corporate activities.
ONEOK Partners had cash balance of $6.2 million as of Jun 30, 2013. Cash provided by operating activities for the six months of 2013 was $383.5 million. The partnership’s current liquidity position is not sufficient to meet the requirements for reduction of the existing debt burden.
At the end of second-quarter 2013, credit rating companies Moody's Investors Service and Standard & Poor's maintained their long-term debt credit ratings on ONEOK Partners to Baa2 and BBB, respectively. Moody's reiterated stable outlook on the partnership; while Standard & Poor's downgraded its outlook to negative from stable due to weak commodity pricing. Both the ratings reflect high or sufficient capability to meet financial obligations. A stable rating enables the partnership to gather funds from the investors at a reasonable rate, while reducing cost of debt.
ONEOK Partners currently has a Zacks Rank #2 (Buy). Other stocks from the industry that are presently performing well include Magellan Midstream Partners LP (MMP) with a Zacks Rank #1 (Strong Buy), and Delek Logistics Partners LP (DKL) with a Zacks Rank #2 (Buy).
Tulsa, Okla.-based ONEOK Partners, a subsidiary of ONEOK Inc. (OKE), is engaged in gathering, processing, storing and transporting of natural gas in the U.S.
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