Lehman Brothers is keeping Boardwalk (BWP) at equal weight but it is moving its target price from 41 to 23 dollars. With advise like this it is a surprise that they are in the trouble they're in? No other news so far this morning. Its all about the fed today. Market looks like it wants to rally and possibly rally hard if the news today is favorable.
Saw this post yesterday on the comments board and i thought it summed up the current situation pretty well.
The access to credit has not been an issue for MLPs and is not an issue currently. EPB was able to raise $500mm in a difficult market in November 2007, and WMZ was able to price in the middle of the IPO range in late January 2008 (at a time when nobody else would have dared price equity). Last week OKS and DPM both issued equity. The MLPs that rely on accessing public debt markets on a regular basis are the large cap "blue chip" MLPs like EPD, PAA, OKS, etc. Most of the mid-cap and small-cap MLPs rely on revolving credit facilities and term loans, which, once established with creditors, are not dependent on accessing public markets.An important distinction to keep in mind that it may be perceived that the issues with the credit markets are affecting the MLPs, and this may be influencing possible MLP buyers and driving down stock prices. However, the ambitious capital programs announced by most MLPs (EPD-+$1.5bn in 2008, OKS-$+1bn/yr through 2009, KMP-+$3.3bn in 2008, to name a few) show that these MLPs are not concerned about liquidity. The more likely scenario is that MLPs (or more broadly, small-cap relatively illiquid names across the stock market) are getting crushed right now as major institutional players and small individual investors alike flee from one investment to the other in a blind panic.
joseph cioffi's Source Page - Associated Content
5 comments:
The last thing we need today is another false rally.
So far the relative performance of MLPs is weak. Dow +245 and MLPs are nowhere near keeping up with the mkt.
Really atrocious performance the last week or so.
We just have no real buyers in the sector and plenty of toxic sellers. Until this imbalance rights itself we are in performance hell.
On the funding issue, I don't think the market appreciates the MLP structure. GP's are generally willing and able to fund expansion projects. See yesterday's BWP/Loews deal.
GP's have deep pockets.
Morningstar has all of the MLP's under fair value review based on the premise that they will have trouble rasing money for future projects in the current equity market uncertainty. This seems to have come out of the blue as Morningstar historically has rated the MLP's very highly.
Post a Comment