By Paul A. Harris
Portland, Ore., June 26 – Making its first pass at the high-yield new issue market since relinquishing its investment-grade ratings earlier in 2020, Occidental Petroleum Corp. priced $2 billion of senior notes (Ba2/BB+/BB) in three tranches on Friday, according to market sources.
All three tranches priced at the wide ends of official talk.
Citigroup Global Markets Inc. was the lead bookrunner. Joint bookrunners were J.P. Morgan Securities LLC, RBC Capital Markets LLC, Wells Fargo Securities LLC, Barclays, BofA Securities Inc., HSBC Securities (USA) Inc., MUFG, SG CIB and SMBC Nikko Securities America Inc.
The deal included a $500 million tranche of five-year notes that priced at par to yield 8%, at the wide end of the 7¾% to 8% yield talk. Initial guidance was in the high 7% area.
The offering also included a $500 million tranche of seven-year notes that priced at par to yield 8½%, at the wide end of the 8¼% to 8½% yield talk but in line with early guidance that had the seven-year notes coming 50 basis points behind the five-year notes.
The long tranche came as $1 billion of 10-year notes that priced at par to yield 8 7/8%, at the wide end of the 8¾% to 8 7/8% talk but tight to early guidance that had the 10-year notes coming 50 bps behind the seven-year notes.
After Friday's close, a high-yield trader was seeing all three tranches in the context of 98¼ to 99¼, give or take 25 cents.
The Houston-based energy company plans to use the proceeds to fund a concurrent tender offer for certain of its senior notes and to refinance debt.
| Issuer: | Occidental Petroleum Corp.
|
| Amount: | $2 billion
|
| Securities: | Senior notes
|
| Lead bookrunner: | Citigroup Global Markets Inc.
|
| Joint bookrunners: | J.P. Morgan Securities LLC, RBC Capital Markets LLC, Wells Fargo Securities LLC, Barclays, BofA Securities Inc., HSBC Securities (USA) Inc., MUFG, SG CIB and SMBC Nikko Securities America Inc.
|
| Senior co-managers: | BBVA Securities Inc., Mizuho Securities USA Inc., Scotia Capital (USA) Inc. and Standard Chartered Bank
|
| Co-managers: | BNP Paribas Securities Corp., Credit Agricole CIB, Credit Suisse Securities (USA) LLC, PNC Capital Markets LLC, TD Securities (USA) LLC, U.S. Bancorp Investments Inc., BNY Mellon Capital Markets LLC and CIBC World Markets Corp.
|
| Make-whole call: | Treasuries plus 50 bps
|
| Trade date: | June 26
|
| Settlement date: | July 13
|
| Ratings: | Moody's: Ba2
|
| S&P: BB+
|
| Fitch: BB
|
| Distribution: | SEC registered
|
| Marketing: | Roadshow
|
|
|
| Five-year notes
|
| Amount: | $500 million
|
| Maturity: | July 15, 2025
|
| Coupon: | 8%
|
| Price: | Par
|
| Yield: | 8%
|
| Spread: | 770 bps
|
| Call: | April 15, 2025 and thereafter at par
|
| Price talk: | 7¾% to 8%
|
|
|
| Seven-year notes
|
| Amount: | $500 million
|
| Maturity: | July 15, 2027
|
| Coupon: | 8½%
|
| Price: | Par
|
| Yield: | 8½%
|
| Spread: | 802 bps
|
| Call: | Jan. 15, 2027 and thereafter at par
|
| Price talk: | 8¼% to 8½%
|
|
|
| 10-year notes
|
| Amount: | $1 billion
|
| Maturity: | July 15, 2030
|
| Coupon: | 8 7/8%
|
| Price: | Par
|
| Yield: | 8 7/8%
|
| Spread: | 824 bps
|
| Call: | Jan. 15, 2030, and thereafter at par
|
| Price talk: | 8¾% to 8 7/8%
|
|
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