What does the pricing of the 4.70% 2031 and 5.60% 2036 senior notes (≈99.9% of par) reveal about market perception of PAA’s credit risk and relative yield versus peers?

The fact that the 4.70 % 2031 notes and the 5.60 % 2036 notes were priced at 99.865 % and 99.798 % of face—i.e., a discount of only 0.14‑0.20 %—signals that investors view Plains All American (PAA) as a border‑line but still fairly “investment‑grade” credit name. In a pure‑par pricing world the discount would be zero; the modest discount therefore reflects a mild credit‑pricing premium rather than a full‑blown risk premium. When you compare the yields to comparable senior unsecured pipelines (e.g., Williams Re‑/Transco 5‑year notes at ~4.0 % and Kinder Morgan’s 5‑year at ~4.3 %), PAA’s 4.70 % (2031) and especially 5.60 % (2036) sit above the “mid‑market” spread, indicating the market is demanding extra compensation for perceived higher credit and liquidity risk relative to better‑rated peers. The 2036 issue, with the longer horizon, bears the larger yield bump because the additional years compound the uncertainty around cash‑flow coverage and the firm’s underlying asset‑base.

Trading implication: The notes are essentially priced at a small “risk‑discount” while still offering an attractive yield relative to the broader pipeline universe. In a secondary‑market environment the notes should trade near the same discount (≈99.8‑99.9 % of par) unless there is a rating downgrade or a shift in commodity‑price outlook. For a credit‑balanced portfolio, the 5.60 % 2036 note looks like a sticky‑yield position—selling at a thin discount now locks in a spread that is roughly 250‑300 bps above the benchmark Treasury curve and about 100‑150 bps higher than the highest‑rated peers. If the market tightens spreads on a commodities rally or a rating upgrade, you could capture price appreciation back to par plus the locked‑in coupon. Conversely, a rating cut or a bearish oil‑gas outlook would widen the discount further, pressuring the price below 99 %. Maintain a short‑duration bias (favor the 2031 issuance) if you anticipate a near‑term credit‑stress scenario, and a long‑duration bias (the 2036 issuance) if you expect a stable or improving credit profile and are after yield‑pickup.