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Magellan Midstream Prices Senior Notes

Zacks Equity Research

Tulsa, OK-based publicly traded energy pipeline partnership Magellan Midstream Partners LP (MMP) reported the pricing of senior notes worth $300 million. The notes, carrying an interest rate of 5.15%, are expected to mature by Oct. 15, 2043. The partnership expects the offering to complete on Oct. 10, 2013.

Magellan Midstream added that the notes will likely be priced at 99.56% of their face value and is expected to have a yield to maturity of 5.179%. The net proceeds – of roughly $295.6 million – from the notes offerings will be utilized for repaying debt under the revolving credit facility and for normal partnership activities. Magellan Midstream might also invest the proceeds in some securities that bear interest.

Magellan Midstream is a master limited partnership (MLP) that owns and operates a diversified portfolio of energy infrastructure assets. The partnership primarily transports, stores, and distributes refined petroleum products and, to a lesser extent, ammonia. Magellan conducts its operations in three segments: Refined Products, Crude Oil and Marine Storage.

Magellan Midstream owns an attractive portfolio of energy infrastructure assets that generate stable and recurring fee- and tariff-based revenues. This includes the longest U.S. refined petroleum products pipeline system, access to more than 40% of the refining capacity in continental U.S. along with imports, and many petroleum terminals with more than 80 million barrels of storage.

Magellan Midstream currently retains a Zacks Rank #2 (Buy), implying that it is expected to outperform the broader U.S. equity market over the next one to three months.  

Apart from Magellan Midstream, one can look at other oil and gas pipeline MLPs like Energy Transfer Partners LP (ETP), Kinder Morgan Energy Partners LP (KMP) and Pioneer Southwest Energy Partners LP (PSE) that offer value. All the partnerships sport a Zacks Rank #2 (Buy).

Read the Full Research Report on MMPRead the Full Research Report on KMPRead the Full Research Report on ETPRead the Full Research Report on PSEZacks Investment Research