13 August 2015 by pdonnat
We should consider what happened today to OKE as being symptomatic of the current market environment. OKE ( ONEOK , Inc ) is a Tulsa based diversified energy company owning more that 40% of OKS ( Oneok Partners LP ), the largest US NGL pipeline system owner. OKE increased its holding in OKS today. The acquisition is funded by a 500MUSD bond issuance. Adding 50% to their current outstanding debt, being an illiquid credit, losing their last investment grade rating today, they have to concede a large discount to the market to raise more debt, at a cost for current investors. Differentiation is growing from one issuer to another. The capital market is any more chasing the yield buy investors are looking at risks.