Moody’s drops Oneok notes; rates CFR, notes Ba1

Moody's Investors Service said it downgraded Oneok, Inc.'s senior unsecured notes rating to Ba1 from Baa3 and assigned a corporate family rating of Ba1, a probability of default rating of Ba1-PD and a speculative grade liquidity rating of SGL-2.

The outlook is stable.

The agency also assigned a Ba1 rating to Oneok’s proposed $500 million unsecured notes offering.

Concurrently, Moody's affirmed Oneok Partners, LP's (OKS) Baa2 rating and P-2 commercial paper rating.

The outlook was changed to negative from stable.

Moody’s said the downgrade was prompted by Oneok’s decision to undertake the proposed notes offering, which re-leverages Oneok as a pure-play general partner whose holdings consist solely of the general partner interest, Incentive Distribution Rights and limited partnership common units of OKS.

Debt proceeds supplemented by balance sheet cash will be used by Oneok to acquire $650 million of OKS limited partnership units; concurrently, OKS will sell $100 million limited partnership units to an existing institutional holder in a registered offering. OKS will use the net proceeds of the combined $750 million for debt reduction.

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