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Enbridge Energy Partners, L.P. Message Board

  • ezgo2442 ezgo2442 Dec 3, 2008 3:33 PM Flag

    why is this falling?


    Have to say I am mystified by recent action.

    comments welcome...thanks

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    • are you on crack? While obama may be good for certain investments by default at the present time he will most certainly ruin the economy and turn the US into a 3rd world country, which is by the way his grand plan. That way he can assure himself to be coronated as king obama. Get a freaking clue, you dumbtards that elected this fool still are not smart enough to see what he is doing. wake up

    • Can someone tell me what effect a reduction of oil imports from Canada would have on EEP? I've been wondering if this could be impacting EEP's price. Alberta shale formation and tar sand oil extraction costs are high; its "dirty" oil that costs more to refine and Alberta has slapped a royalty tax on to boot. With oil priced where it is today Canadain oil may not be able to be shipped with any profit.

      If my speculation is way off base no offense taken to enlighten me.

      Holiday Cheers to all

    • Thanks. That's part of the answer. They had to raise money to pay off 4%notes and I imagine this is the cheapest way right now. Let's hope they don't sell stock, which is yielding >15%. I wonder what their credit facility rate is currently. Anyone know? I would expect them to keep the facility available for short-term needs and these 9.875% notes just gave them more flexibility. I sure hope they can use the funds profitably. Any more comments? Thanks

    • I went to EEP website and viewed the prospectus for the 9.875% unsecured Senior notes.EEP intends to pay off thier credit facility w/ proceeds, also pay off 4% senior notes due 1/15/09(200M). EEP can redeem at any time. Interest payments twice/year commencing 9/1/09.Ratings Baa2-Moody's BBB S&P. In the text of the document they give the caveat that if they should reduce the quartly div for EEP/EEQ, the price of this issue on the market may drop as a result. This was a general disclaimer and not specific to any current or future event. My broker informed me that these Notes will be available after close of issue, Dec 22,08.

    • Exactly. I agree, but the only reasons they would be trading below par are that interest rates are even higher or the company's prospects were poorer than at the time they were issued. Neither of those would be a propitious time to refinance. So my previous questions still stand and I'd appreciate more responses. Thanks.

    • The ability to recall is only useful if the notes are trading above par because it enables the issuer to get the notes back at par.

      If the notes are trading at, or below, par, the issure is better off just buying them back on the open market.

    • I'm a little fuzzy about: "When rates recede, they can re-fi, just like your mortgage." Refinancing isn't free, and I wonder if these new notes are callable? I'd appreciate more details about the economics of issuing these seemingly high rate notes. I would presume they would have to expect a higher rate of return on their useage of the proceeds than on their cost of funds, that is, regardless of potential future refinancing. Thanks.

    • Anyone know EEP's credit rating w/ Moody's& Fitch? I'm trying to get a piece of the 500M notes. The 500M at 9% KMP Senior notes drew $2B in subscribers interested within a day. Seems like plenty of $ on the sidelines waiting for decent return.

    • In finance, there is the Capital Asset Pricing Model (CAPM). It takes the blended average of all debt and equity and allows a company to evaluate future projects based on the cost of capital. They replaced their debt, which matures in less than a month, with longer term debt. When rates recede, they can re-fi, just like your mortgage. As far as the new proceeds, they will have a higher "hurdle rate" to be profitable, so only the ones that can make it over the hurdle will be undertaken. This is a short term positive (and if the funds are used properly, good in the long term), as well as I would assume all of their financial number crunchers approved.

      In summary, the cost of debt is only one part of the go/no go decisions on growth projects. I would guess that the market will reward EEP for getting the same rate as EDP, as well as removing some uncertainty.

    • I know it's in line with the new market for debt. I say 'ouch' because it's 3-4% higher than what debt used to cost.

      Pipelines carry lots of debt. If they have to refi that debt at 3-4% higher than now [or perhaps even more after the Fed has to raise rates in a few years], then their profits go down. $3 billion at 4% higher is $120M right off the bottom line.

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