Oil & gas operator
Energy Transfer Equity, L.P.
) has decided to issue 5.875% senior notes worth $450 million due
in Jan 2024. The partnership had initially decided to issue $400
million senior notes, which was then raised to $450 million.
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The partnership intends to utilize the net proceeds to fund its
previously announced tender offer to purchase for cash up to an
aggregate of $600.0 million principal amount of its 7.500% senior
notes due in 2020.
The redemption of the senior notes worth $600 million will
improve the long-term debt-to-capitalization ratio which stood at
56.1% as on Sep 30, 13. This is a smart move by the partnership
to lower its interest burden. It also provides the partnership a
cushion to recycle the funds in its business for a longer period.
Energy Transfer Equity announced that the new notes will be
treated pari passu with its secured term loan and dues under its
revolving credit facility. The issue received a Ba2 rating from
the rating agency Moody's Investors Service.
We believe Energy Transfer Equity took advantage of the current
market condition to issue new debts at favorable interest rates.
This new debts will lower the interest burden of the partnership
in the long run. The new debt offering is expected to close on
Dec 2, 2013.
Energy Transfer Equity has a Zacks Rank #3 (Hold).However,
better-placed operators in the sector include
Magellan Midstream Partners LP
Spectra Energy Corp.
EQT Midstream Partners, LP
), all of which carry a Zacks Rank #2 (Buy).