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Sunoco to Offer $700M Notes - Analyst Blog

By: Zacks.com
Posted: 1/8/2013 3:30:00 PM
Referenced Stocks: MLP;MWE;SXL

Energy pipelines and terminals operator Sunoco Logistics Partners L.P. ( SXL ) recently announced that it will offer $700 million of senior notes through its fully owned subsidiary Sunoco Logistics Partners Operations L.P. The offering will be made in two parts -- $350 million 3.45% senior notes due 2023 and $350 million 4.95% senior notes due 2043.

Net returns from the issue are estimated at approximately $692 million. The operating partnership will be using the proceeds to repay its outstanding balance of $350 million and $200 million under revolving credit facility. The remaining proceeds will be used for general partnership purposes and capital investments.

Sunoco expects the proceedings to be over on January 10, 2013, subject to customary closing conditions.

Sunoco ended the third quarter of 2012 with $1,627.0 million in total debt (consisting of $179.0 million of borrowing under the partnership's credit facility), representing a debt-to-capitalization ratio of approximately 54.1%. We also expect interest expenses to increase with the sale of the new notes.

Sunoco Logistics Partners currently retains a Zacks #1 Rank (short-term Buy rating). We are also maintaining our long-term Outperform recommendation on the partnership.

Philadelphia-based Sunoco Logistics Partners L.P., a master limited partnership (MLP), acquires, owns, and operates a geographically diverse portfolio of refined product and crude oil pipelines and terminal facilities. Sunoco Logistics is organized into four segments -- Refined Products Pipeline System, Terminal Facilities, Crude Oil Pipeline System and Crude Oil Acquisition and Marketing.

With its low-risk and stable cash flow-generating energy infrastructure assets, Sunoco Logistics offers investors an opportunity to capture income growth through steadily rising cash distributions and capital appreciation.

However, among Sunoco's peers, MarkWest Energy Partners L.P. ( MWE ) holds a Zacks #3 Rank, which translates into a short-term Hold rating.



MARKWEST EGY PT (MWE): Free Stock Analysis Report

SUNOCO LOGISTIC (SXL): Free Stock Analysis Report

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