Buckeye Partners L.P.
) announced that it will issue $500 million, 4.15% senior
unsecured notes due Jul 1, 2023. The partnership will utilize the
proceeds from this transaction to repay the outstanding amount on
the maturity of its previously issued $300 million, 4.625% notes
due Jul 15, 2013 and for general corporate purposes.
Several financial institutions will facilitate the
transaction. The notes offering will expire on Jun 10, 2013 and
is subject to customary closing conditions. Buckeye Partners
expects to receive net proceeds of roughly $495.8 million after
deductions relating to underwriting discount and offering
The partnership often engages in notes issuance especially to
refinance its existing debts. Buckeye Partners' last issuance was
made in Jan 2011 when it declared an offering of $650 million,
4.875% senior notes due Feb 1, 2021 to fund a part of the
purchase amount of 80% interest acquisition in Bahamas Oil
Refining Company International Limited and for general corporate
Although the partnership managed to lower its debt level by
10.2% year over year to $2,455.4 million as of Mar 31, 2013, we
believe the current issuance will likely to increase Buckeye
Partners' debt level by $200 million. Its current long term debt
to capital ratio is at 49.8%, higher than its peer group average
Post the issue, the long-term debt to capital ratio will rise
to 51.5%. Interest expenses for Buckeye would also increase owing
to the new offerings. In addition, the partnership's current
senior unsecured rating is reaffirmed at Baa3 by Moody's which
will help Buckeye to raise debts at favorable interest rates and
reduce its cost of borrowing.
Presently, Buckeye Partners carries a Zacks Rank #3 (Hold).
Other pipeline stocks looking up are
Kinder Morgan Energy Partners, L.P.
Access Midstream Partners, L.P.
Enbridge Energy Management LLC
). All these stocks at present retain a Zacks Rank #2 (Buy).
Based in Houston, Texas, Buckeye Partners, LP owns and
operates refined petroleum products pipeline systems in the
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