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Energy Transfer Partners Prices Senior Notes Worth $2.25B

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Midstream player Energy Transfer Partners and its subsidiary Sunoco Logistics Partners Operations L.P. recently announced the pricing of senior notes offering worth $2.25 billion. The offering, which will be made in two tranches, is likely to close on Sep 21 subject to customary closing conditions.

The first tranche of the notes offering, with an interest rate of 4%, will raise $750 million. It will be sold at 99.216% of its face value and is scheduled to mature in 2027. The second part will be sold at 99.806% of its face value is worth $1.5 billion, carries an interest rate of 5.40% and is slated to mature in 2047.

Joint book-running managers for the offering are U.S. Bancorp Investments, Inc., PNC Capital Markets LLC and Wells Fargo Securities, LLC.

The partnership intends to use a portion of the proceeds from the offering for the repayment of the principal amount of its 6.5% convertible senior notes due 2021. The remaining amount will be used to lower the borrowings under its revolving credit facility and for general partnership purposes.

Dallas, TX-based Energy Transfer Partners is a Master Limited Partnership primarily engaged in the gathering, processing, storage and transportation of natural gas and natural gas liquids through a network of pipelines spanning some 62,500 miles.

The partnership is well poised to grow on the back of its geographically dispersed asset mix. Further, Sunoco’s merger with Energy Transfer is likely to boost growth and value of the partnership and result in around $200 million in cost savings by 2019.

However, the partnership’s price performance is not impressive. Year to date, Energy Transfer Partners has lost 22.4% as compared with the 14% decline of the industry.

As a result, Energy Transfer Partners currently carries a Zacks Rank #3 (Hold), implying that the stock will perform in line with the broader U.S. equity market over the next one to three months.

Some better-ranked players from the broader energy space are TransCanada Corporation (TRP - Free Report) , Lonestar Resources US, Inc. and Vermilion Energy Inc (VET - Free Report) . All the three companies sport a Zacks Rank #1(Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

TransCanada posted an average positive earnings surprise of 4.06% in the trailing four quarters.

Lonestar Resources delivered an average positive earnings surprise of 39.71% in the trailing four quarters.

Vermilion Energy reported a positive earnings surprise of 528.57% in the previous quarter.

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