Energy Producer May Enter Rate Swap

  • 30 Sep 2002
Email a colleague
Request a PDF

Ocean Energy, an oil and gas producer with USD1.2 billion in annual revenue, is considering entering an interest rate swap on the back of a five-year USD400 million debt offering it sold earlier this month. The company may look to convert the fixed-rate deal into a synthetic floating-rate obligation, according to Winston Talbert, v.p. and treasurer in Houston. "One of the reasons we did a five-year was so that we could swap it back to floating," he said, adding, "we're sort of mulling it over."

In any swap, Ocean Energy would look to pay a spread over six-month LIBOR and receive the 43Ž8% coupon on the bond. However, Talbert noted that given the low coupon for a BBB rated energy company, he may also choose to leave the liability in fixed rate. In addition, the cash was raised to refinance outstanding debt with an 87Ž8% coupon. "We're picking up quite a bit as is and the last thing we want to do is swap it out at the low and have rates go up," he noted. But, Talbert estimated the company could save even more by entering a swap and paying roughly 120 basis points over LIBOR.

The bond offering brings Ocean Energy's fixed-rate debt to 70% of its total outstanding, and although the company strives to have an even mix of fixed and floating-rate debt, Talbert said he is comfortable with the current level. He added Ocean Energy would select derivatives counterparties from among its 15-member bank group and not limit the business to Goldman Sachs and Merrill Lynch, who underwrote the deal, if it executes the swap. The company has about USD1.4 billion in outstanding debt.

  • 30 Sep 2002

All International Bonds

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 15 Aug 2018
1 Citi 238,370.95 916 8.14%
2 JPMorgan 221,587.27 991 7.57%
3 Bank of America Merrill Lynch 214,543.42 717 7.33%
4 Barclays 184,024.85 666 6.29%
5 HSBC 157,697.44 732 5.39%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 JPMorgan 32,467.80 60 6.57%
2 BNP Paribas 32,284.10 130 6.53%
3 UniCredit 26,992.47 123 5.46%
4 SG Corporate & Investment Banking 26,569.73 97 5.37%
5 Credit Agricole CIB 23,807.36 111 4.81%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Goldman Sachs 10,167.68 46 8.82%
2 JPMorgan 9,894.90 42 8.58%
3 Citi 8,202.25 45 7.11%
4 UBS 6,098.17 23 5.29%
5 Credit Suisse 5,236.02 28 4.54%