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Magellan Midstream Prices $250M Senior Notes

Zacks Equity Research

Tulsa, OK-based publicly traded energy pipeline partnership Magellan Midstream Partners LP (MMP) announced the pricing of senior notes worth $250 million. The notes, carrying an interest rate of 5.15%, are expected to mature in 2043.

These notes are an addition to the series which was offered last year on Oct 10. The partnership expects this new offering to be completed on Mar 4.

Magellan Midstream added that the notes are priced at 103.085% of their face value and are expected to have a yield to maturity of 4.95%. The net proceeds – of roughly $255.0 million – will be utilized for repaying debt under the revolving credit facility and for normal partnership activities. Magellan Midstream may also invest the proceeds in some securities that bear interest.

Magellan Midstream is a master limited partnership (MLP) that owns an attractive portfolio of energy infrastructure assets that generate stable and recurring fee- and tariff-based revenues.

On Feb 5, the partnership reported fourth quarter earnings per unit of 88 cents, surpassing the Zacks Consensus Estimate of 82 cents and the prior-year quarter’s adjusted profit of 69 cents. Total revenue, at $577.4 million, was up 14.8% year over year and also beat the Zacks Consensus Estimate of $560.0 million. An improvement in transportation volumes of refined products was primarily responsible for the outperformance.

Moreover, last month, Magellan Midstream raised its fourth-quarter 2013 cash distribution 5% sequentially and 17% year over year to 58.5 cents per unit.

All these factors are incorporated in Magellan Midstream’s Zacks Rank #2 (Buy), which implies that it is expected to outperform the broader U.S. equity market over the next one to three months.

Other players from the same industry worth considering include Crestwood Equity Partners LP (CEQP), NuStar Energy L.P. (NS) and ONEOK Partners, L.P. (OKS). While Crestwood sports a Zacks Rank #1 (Strong Buy), NuStar and ONEOK Partners hold a Zacks Rank #2 (Buy).

Read the Full Research Report on MMP
Read the Full Research Report on CEQP
Read the Full Research Report on NS
Read the Full Research Report on OKS

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