Natural gas pipeline operator, Energy Transfer Partners LP (ETP) declared the pricing of senior notes worth $1.5 billion. The notes will be issued in three parts of $700 million, $350 million and $450 million (principal amount).
The $700 million notes, likely to be priced at 99.829% of their face value, are set to mature in 2020 and will carry an annual interest rate of 4.15%. The $350 million notes, estimated to be priced at 99.181% of their face value, will bear an interest rate of 4.90% and are scheduled to mature in 2024. The remaining $450 million worth notes, expected to be priced at 97.647% of their face value, are supposed to mature in 2043 and carry an estimated interest rate of 5.95%. Energy Transfer added that the sale of the notes will likely be settled on Sep 19, 2013.
The net proceeds – of roughly $1.49 billion – will be utilized to repay debt under term loan, revolving credit facility and for normal partnership activities.
Dallas, Texas-based Energy Transfer is a master limited partnership (MLP) engaged primarily in the gathering, processing, storage and transportation of natural gas.
Energy Transfer is well positioned to compete in the natural gas midstream and transportation & storage businesses with its geographically-dispersed asset mix. The partnership has a significant market presence in each of its operating areas, which are located in major natural gas-producing regions of the U.S.
However, acquisitions have historically played a major role in the partnership’s growth profile and are expected to remain significant in the future as well. Energy Transfer may find it difficult to complete accretive transactions in the future, which could negatively impact its growth rate.
Energy Transfer currently retains a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.
Meanwhile, one can look at oil and gas production pipeline MLPs like Magellan Midstream Partners LP (MMP), Pioneer Southwest Energy Partners LP (PSE) and Delek Logistics Partners LP (DKL) that offer value. Magellan Midstream sports a Zacks Rank #1 (Strong Buy) while Pioneer Southwest Energy and Delek Logistics carry a Zacks Rank #2 (Buy).
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