Williams Prices $1.5 Billion of Senior Notes

Rhea-AI Summary

Williams (NYSE: WMB) has announced the pricing of a $1.5 billion senior notes offering, consisting of two tranches: $1.0 billion of 5.600% Senior Notes due 2035 at 99.843% of par and $500 million of 6.000% Senior Notes due 2055 at 99.330% of par.

The offering's settlement is expected on January 9, 2025, subject to customary closing conditions. The company plans to use the net proceeds to repay commercial paper, near-term debt maturities, and other general corporate purposes. Deutsche Bank Securities, J.P. Morgan Securities, Mizuho Securities USA, and Morgan Stanley & Co. are serving as joint book-running managers for the offering.

Positive

• Successful pricing of $1.5 billion senior notes offering
• Long-term debt structure with maturities extending to 2035 and 2055
• Proceeds will help reduce commercial paper and near-term debt obligations

Negative

• Taking on substantial new long-term debt obligations
• Higher interest rates at 5.600% and 6.000% for the notes

Insights

Fixed Income Analyst

The $1.5 billion dual-tranche bond offering by Williams reflects a strategic debt restructuring move. The pricing of $1 billion in 5.600% notes due 2035 at 99.843% and $500 million in 6.000% notes due 2055 at 99.330% suggests strong market confidence in WMB's long-term creditworthiness.

The yield spread and pricing indicate reasonable borrowing costs given the current rate environment. The company's decision to extend debt maturities through 2035 and 2055 demonstrates prudent liability management, effectively reducing refinancing risk. Using proceeds to retire commercial paper and near-term debt optimizes the capital structure by replacing short-term obligations with longer-dated fixed-rate debt.

For investors, this offering provides exposure to an investment-grade midstream energy company with stable cash flows. The participation of major financial institutions as joint book-runners adds credibility to the issuance. Simple terms: WMB is taking out new long-term loans at fixed interest rates to pay off shorter-term debts, which helps manage their future payment schedule better.

Corporate Finance Expert

This debt issuance strengthens Williams' financial flexibility by extending its debt maturity profile and locking in fixed rates in a volatile interest rate environment. The successful pricing of both tranches, particularly the 30-year notes, demonstrates strong investor appetite for WMB's credit.

The slight discount to par value (99.843% and 99.330%) is typical for long-duration bonds and helps ensure attractive yields for investors while maintaining reasonable borrowing costs for Williams. The company's strategy to refinance commercial paper with longer-term debt is particularly astute given the current market conditions and helps reduce interest rate risk exposure.

Think of it like replacing a variable-rate credit card debt with a fixed-rate mortgage - it provides more predictability in future payments. For a company with a $68.6 billion market cap, this $1.5 billion offering represents a manageable 2.2% of its market value, indicating a conservative approach to leverage.

TULSA, Okla.--(BUSINESS WIRE)-- Williams (NYSE: WMB) announced today that it has priced a public offering of $1.0 billion of its 5.600% Senior Notes due 2035 at a price of 99.843 percent of par and $500 million of its 6.000% Senior Notes due 2055 at a price of 99.330 percent of par. The expected settlement date for the offering is January 9, 2025, subject to the satisfaction of customary closing conditions.

Williams intends to use the net proceeds of the offering to repay its commercial paper, near-term debt maturities and for other general corporate purposes.

Deutsche Bank Securities Inc., J.P. Morgan Securities LLC, Mizuho Securities USA LLC and Morgan Stanley & Co. LLC are acting as joint book-running managers for the offering.

This news release is neither an offer to sell nor a solicitation of an offer to buy any of these securities and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale is unlawful.

An automatic shelf registration statement relating to the notes was previously filed with the Securities and Exchange Commission (the “SEC”) and became effective upon filing. Before you invest, you should read the prospectus in the registration statement and other documents Williams has filed with the SEC for more complete information about Williams and the offering. A copy of the prospectus supplement and prospectus relating to the offering may be obtained on the SEC website at www.sec.gov or from any of the underwriters by contacting:

Deutsche Bank Securities Inc.
1 Columbus Circle
New York, New York 10019
Attention: Prospectus Group
Email: Prospectus.Ops@db.com

J.P. Morgan Securities LLC
383 Madison Ave
New York, New York 10179
Attention: Investment Grade Syndicate Desk
Phone: (212) 834-4533

Mizuho Securities USA LLC
1271 Avenue of the Americas
New York, New York 10020
Toll-free: 1-866-271-7403

Morgan Stanley & Co. LLC
1585 Broadway
New York, New York 10036

About Williams

Williams (NYSE: WMB) is a trusted energy industry leader committed to safely, reliably, and responsibly meeting growing energy demand. We use our 33,000-mile pipeline infrastructure to move a third of the nation’s natural gas to where it's needed most, supplying the energy used to heat our homes, cook our food and generate low-carbon electricity. For over a century, we’ve been driven by a passion for doing things the right way. Today, our team of problem solvers is leading the charge into the clean energy future – by powering the global economy while delivering immediate emissions reductions within our natural gas network and investing in new energy technologies.

Portions of this document may constitute “forward-looking statements” as defined by federal law. Although Williams believes any such statements are based on reasonable assumptions, there is no assurance that actual outcomes will not be materially different. Any such statements are made in reliance on the “safe harbor” protections provided under the Private Securities Reform Act of 1995. Additional information about issues that could lead to material changes in performance is contained in Williams’ annual and quarterly reports filed with the SEC.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250106229864/en/

MEDIA:

media@williams.com

(800) 945-8723

INVESTOR CONTACTS:

Danilo Juvane

(918) 573-5075

Caroline Sardella

(918) 230-9992

Source: Williams

FAQ

What is the total value of Williams (WMB) senior notes offering in 2025?

Williams (WMB) has priced a total of $1.5 billion in senior notes, comprising $1.0 billion due 2035 and $500 million due 2055.

What are the interest rates for WMB's 2035 and 2055 senior notes?

The 2035 senior notes carry a 5.600% interest rate, while the 2055 senior notes have a 6.000% interest rate.

When is the settlement date for WMB's $1.5 billion senior notes offering?

The settlement date for the senior notes offering is expected to be January 9, 2025, subject to customary closing conditions.

How will Williams (WMB) use the proceeds from the senior notes offering?

Williams plans to use the net proceeds to repay commercial paper, near-term debt maturities, and for other general corporate purposes.

Which banks are managing WMB's $1.5 billion senior notes offering?

Deutsche Bank Securities, J.P. Morgan Securities, Mizuho Securities USA, and Morgan Stanley & Co. are acting as joint book-running managers for the offering.