Banking, finance, and taxes
Cash Pipeline is Flowing, But Rates are Up (ETP, KMP)
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Energy Transfer Partners L.P. (NYSE:ETP) has priced an offering of $600 million in 9.7% senior notes due 2019, and the paper has been rated ‘BBB-‘ with a ‘stable’ outlook by Fitch Ratings. Earlier this year, Energy Transfer issued $1.5 billion in senior notes in three offerings. The proceeds from those offerings were used to repay existing debt. The new note will pay outstanding borrowing on the company’s revolving credit facility.
The ten-year note Energy Transfer issued in May had a coupon of 6.7%,compared with 9.7% for the new ten-year note. That’s a pretty big jump.
Another pipeline partnership, Kinder Morgan Energy Partners L.P.(NYSE:KMP), today revealed that it has issued $500 million in ten-yearsenior debt at 9%. Kinder Morgan also issued 3.9 million additionalcommon units to raise another $177 million. The company also raisedanother $194 million by reversing fixed to floating interest rateswaps. Kinder Morgan didn’t say what it was planning to do with thenearly $900 million in cash.
Energy Transfer’s total debt-to-market-cap ratio is nearly 1; KinderMorgan’s is less than 0.7. Energy Transfer’s share price is up about 1%this morning; Kinder Morgan’s is down about 1%.
Paul Ausick
December 19, 2008
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