The oil and gas pipeline operator, ONEOK Partners LP (OKS), announced that it has issued $1.3 billion notes in two tranches. The notes were issued as per the shelf registration statement previously filed by the partnership with the Securities and Exchange Commission. The issue offering will close on January 26, 2011.
One offering comprises $650 million of 3.25% senior notes due February 1, 2016, at an offer price of $99.94 (per $100.00 principal) to yield 3.263%. The second offering constitutes $650 million of 6.125% senior notes due February 1, 2041, at an offer price of $99.36 (per $100.00 principal) to yield 6.172%. The net proceeds of the total offering will be $1.29 billion.
The partnership will utilize the net proceeds of the issue to repay $1.0 billion due under its commercial paper program, redeem $225 million notes due in March 2011 and use the rest for general corporate purposes.
The partnership from time to time issues units or notes to generate funds. Previously, on February 2010, ONEOK Partners issued 5.5 million common units at $60.75 per unit. The proceeds of the units issue were utilized by the partnership to lower its dues under its $1 billion revolving credit facility and for general partnership purposes.
ONEOK Partners’ long-term debts as of September 30, 2010 were $2.58 billion versus $2.82 billion as of December 31, 2009. The partnership repaid $250 million senior notes with available cash and short-term borrowings in June 2010, resulting in a lower debt level. However, the new notes issue will increase the interest expenses of the partnership from $49.1 million reported at end of third quarter 2010.
ONEOK Partners currently retains a Zacks #3 Rank (short-term Hold rating)). We maintain our long-term Neutral rating on the stock. The major peers of the partnership are El Paso Corp. (EP) and Kinder Morgan Energy Partners LP (KMP).
Based in Tulsa, Oklahoma, ONEOK Partners is one of the largest publicly traded master limited partnerships and is a leader in the gathering, processing, storage and transportation of natural gas in the United States.
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