Yeah, I expected it down by 6% (or around there), the dilution. Interesting, the pricing won't be announced for a little while, but I don't recall ever seeing an MLP act like this on news of an offering. Very curious.
No immediate effect. MLP's make offerings and acquisition to be accretive overall with respect to distributions (or at least that's the plan). In any case, this is a small offering, relatively speaking.
So? The market adjusted immediately, not when the offering is priced. It anticipated the pricing, and it MUST have done the same here. It's an immutable law. It is not going to move materially because of the pricing, unless it's a surprise number, but that's practically unheard of in my experience, almost always the market anticipates the price pretty closely.
In this case one would have expected a 6% reaction, we got 3%. That may simply be a reflection of this being priced to yield too high, due to history, etc. They didn't have to drop the price that much to get the offering taken up.
"HOUSTON, Aug. 13, 2012 (GLOBE NEWSWIRE) -- Eagle Rock Energy Partners, L.P. (the "Partnership" or "Eagle Rock") (EROC) announced today that it has priced an upsized underwritten public offering of 8,800,000 of its common units representing limited partner interests at $8.72 per common unit."
And where did the market end up yesterday? That's right, $8.72 per unit. If it drops today it won't because of the pricing, right?