Oneok has ‘clear visibility’ to hit 3.5x to 4x leverage target range

By Devika Patel

Knoxville, Tenn., Nov. 17 – Oneok Inc. is approaching its leverage ratio target range of 3.5x to 4x, but management keeps its options open to rise above that target range if needed. The company is in the process of refinancing some commercial debt to obtain a better coupon with a 10-year maturity.

“We are starting to get to the point where we have clear visibility to hit the metrics that we’ve put out there,” executive vice president, treasurer and chief financial officer Walter Hulse III said at the Bank of America Global Energy Conference in Miami on Wednesday.

“We want to be 3.5x, 4x debt-to-EBITDA or lower.

“There’s not any fine, bright line as to when we cross that, we'll do that.

“It’s a conversation that we regularly have with our board,” he said.

On Monday, the company priced $750 million of 6.1% notes due 2032 (Baa3/BBB/BBB).

Oneok Partners, LP and Oneok Partners Intermediate LP are guaranteeing the notes.

The notes priced at 99.919 to yield 6.111%, or at Treasuries plus 230 basis points.

Oneok may optionally call the notes with a Treasuries plus 35 bps make-whole premium until Aug. 15, 2032. After that date the notes are callable at par.

Barclays, Mizuho Securities USA LLC, TD Securities (USA) LLC and Wells Fargo Securities, LLC were the joint bookrunners for the offering. BofA Securities, Inc., Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC and Truist Securities, Inc. were also listed as bookrunners.

Proceeds were earmarked to repay outstanding debt from the company’s commercial paper program, which has a weighted average annual interest rate of 4.42% as of Nov. 14.

Based in Tulsa, Okla., Oneok is a natural gas company.

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