Solid Institutionalization of the MLP Sector Likely to Drive Yields Lower Toward REITs and Utilities: An Expert Analyst Discusses New Product Developments Within the MLP Space

Wall Street Transcript

67 WALL STREET, New York - April 9, 2013 - The Wall Street Transcript has just published its Oil & Gas: Master Limited Partnerships Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Increasing Demand for Midstream Assets - U.S. Energy Infrastructure Build Out - Emerging Shale Plays - Oil and Gas Transportation Infrastructure Demand - Master Limited Partnerships Distribution Growth - Outlook for Natural Gas Liquids - Low Treasury Yields and MLP Dividends

Companies include: Energy Transfer Partners L.P. (ETP), Kinder Morgan Energy Partners (KMP), El Paso Pipeline Partners, L.P (EPB), Copano Energy LLC (CPNO), Sunoco Logistics Partners LP (SXL), Enterprise Products Partners L (EPD), EV Energy Partners LP (EVEP), Linn Energy, LLC (LINE), Atlas Pipeline Partners LP (APL), Plains All American Pipeline L (PAA), Dow Chemical Co. (DOW), Targa Resources Partners LP (NGLS) and many more.

In the following excerpt from the Oil & Gas: Master Limited Partnerships Report, an expert analyst discusses the outlook for the sector for investors:

TWST: What's your overall sentiment on the MLP space right now and why?

Mr. Bellamy: In the short term, tactically for investors we're neutral to bearish. The VIX is trading at fairly low levels that indicate pretty strong complacency in the market. We just came off of a stunning January performance by MLPs that is consistent with historical seasonality, in which MLPs tend to outperform in January due to distribution timing and tax management.

In contrast, February tends to be flat versus the S&P 500, and March tends to be one of the weaker months seasonally versus the S&P 500 for MLPs, so complacency in the market, potential mean reversion on performance - and then we have this sequester coming out of D.C., which inevitably is going to bring oil and gas taxes back into the headlines, and whenever we hear that, sometimes MLPs experience headline risk.

In the short term, I think you probably want to be hoarding cash on the expectations that you have the chance to play a correction. In the longer term, we are very positive. We have extraordinarily accommodative monetary policy out of the Federal Reserve that benefits hard assets and commodities, and that's what all MLPs do and are. I don't see a big change in interest rates coming any time soon that would hinder the extraordinarily low cost of capital that's allowing MLPs to borrow at very low rates and redeploy in highly accretive projects.

Also, I don't see interest rates impacting MLP valuations. We often get the question, "What would happen if interest rates rose?" It's clearly not a positive, but you have to ask the question, "Why are interest rates rising?" Are interest rates rising because the economy is taking off and the Fed can take its foot off the gas pedal on monetary policy? In that case, that's very bullish for stocks and the overall global GDP, and so we would expect compression in MLP yields relative to interest rates were that to occur...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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