Plains All American Pipeline, L.P. (PAA - Free Report) recently announced the closing of an underwritten public offering of $750 million aggregate principal amount of senior notes. The notes carry an interest rate of 4.500% and are slated for maturity in Dec 2026. The notes have a public offering price of 99.716% with a yield to maturity of 4.535%.
Plains All American plans to use the net proceeds of nearly $741.3 million from this offering to initially repay all amounts outstanding under its senior unsecured revolving credit facility and commercial paper program. Amounts repaid thereof may be re-borrowed, as required, to fund its ongoing expansion program, future acquisitions and investments or for general partnership purposes.
Plains All American Pipeline continues to enjoy a favorable financial position. The partnership exited third-quarter 2016 with committed liquidity of $2.5 billion. As of Sep 30, 2016, Plains All American had long-term debt of $9,634 million compared with $10,375 million as of Dec 31, 2015. The long-term, debt-to-total book capitalization ratio at the end of the quarter was 51%, down from 57% at 2015 end.
Apart from utilizing funds in growth projects, a stable financial position allows Plains All American Pipeline to offer distributions at regular intervals.
However, companies like Occidental Petroleum Corporation (OXY - Free Report) , CONSOL Energy Inc. (CNX - Free Report) and Noble Energy Inc. (NBL - Free Report) are currently entering the midstream business by forming MLPs and upgrading infrastructure. If this trend continues, midstream players will be up against tough competition as they generate revenues from exploration and production companies by providing transportation services.
Plains All American carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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