Natural gas pipeline operator
Energy Transfer Partners L.P.
) recently announced that it will be offering $1.25 billion of
senior notes. The offering is divided into two parts - $800
million 3.60% senior notes due 2023 and $450 million 5.15% senior
notes due 2043.
ENERGY TRAN PTR (ETP): Free Stock Analysis
SUNOCO LOGISTIC (SXL): Free Stock Analysis
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Energy Transfer plans to utilize the proceeds of approximately
$1.24 billion for the repayment of borrowings under its revolving
credit facility and for other partnership purposes.
The partnership expects the proceedings to be complete on January
22, 2013, upon fulfillment of customary closing conditions.
The partnership ended third quarter 2012 with long-term debt
(less current maturities) of $8,690.7 million.
Debt-to-capitalization ratio was 52.7%. With the issuance of
$1.25 billion of debt, the debt-to-capital ratio will increase to
We also expect interest expenses to increase with the sale of the
We believe Energy Transfer Partners is well positioned to compete
in the natural gas midstream and transportation & storage
businesses with its geographically-dispersed asset mix. The
partnership has a significant market presence in each of its
operating areas, which are located in major natural gas-producing
regions of the U.S.
However, master limited partnerships (MLPs) typically depend on
equity and debt markets for growth finance. Market turmoil
resulting from issues such as the recent subprime crisis, which
hinders access to debt/equity markets, will impact MLP growth
Earlier in October, Energy Transfer Partners merged with Sunoco
Inc. for $5.3 billion. The partnership will have the ownership of
Sunoco's branded retail business, general partner interest, plus
a 32.4% stake and incentives distribution rights in
Sunoco Logistics Partners L.P.
), a master limited partnership in which Sunoco had 34% stake.
Energy Transfer Partners currently retains a Zacks Rank #3
(Hold). Longer term, we are maintaining our Neutral
recommendation on the stock.