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Magellan Midstream Plans Debt Sale to Buy BP Assets

Magellan Midstream Partners LP, the company that agreed to buy $289 million of petroleum storage facilities and pipelines from BP Plc last month, plans to sell debt to help pay for the purchase, it said in a prospectus.

Magellan Midstream, based in Tulsa, Oklahoma, may sell $300 million of debt due in 2021 as soon as today, according to a person familiar with the transaction.

The notes may pay 135 basis points more than similar-maturity Treasuries, said the person, who declined to be identified because terms aren’t set. A basis point is 0.01 percentage points.

Magellan Midstream agreed to buy 7.8 million barrels of crude oil storage in Cushing, Oklahoma, and more than 100 miles of petroleum pipeline from a BP unit, the company said in a July 13 statement. London-based BP, owner of the Gulf of Mexico well responsible for the world’s worst accidental oil spill, said July 27 that it plans to sell $25 billion to $30 billion of assets in the next 18 months.

JPMorgan Chase & Co., Bank of America Corp., Morgan Stanley and Wells Fargo & Co. are managing the debt sale, according to the prospectus, which didn’t specify the size or timing of the offering or the maturity of the notes.

Magellan Midstream is rated Baa2 by Moody’s Investors Service and an equivalent BBB by Standard & Poor’s.

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