MASTER LIMITED PARTNERSHIPS

Monday, October 06, 2008

Mind-boggling moves today with the dow down 800 points and the mlp index dow 33 points or nearly 16%! Hiland Partners (HLND) is down nearly 10 dollars. Oneok (OKS) and Kinder Morgan (KMP) are down 8. Buckeye (BPL) is down 7. Magellan (MMP) Nustar (NS) Inergy Holdings (NRG) and Sunoco Logistics (SXL) are down 6. Holly (HEP) Plains All American (PAA) Enbridge (EEP) Penn Virginia Holdings (PVG) and Hiland Holdings (HPGP) down 5. Hiland Holdings is down 28%. Markwest (MWE) Energy Transfe (ETP) Amerigas (APU) and Inergy (NRGY) are down 4. And so on and so on and so on.

The corporate bond market has come to a complete standstill today. No trades. Everyone wants protection and no one can get it.

Last hour coming up...prepare for a crash.

13 comments:

Anonymous said...: By Tony Crescenzi
RealMoney.com Contributor
10/6/2008 2:34 PM EDT

One of the most glaring pieces of evidence to support the expression "frozen credit markets" is the lack of corporate bond issuance. Last week, for example, corporate bond issuance was just $1.25 billion in the U.S., according to data from Bloomberg. That paltry sum followed several weeks of scant issuance:

Last week: $1.25 billion
Previous week: $4.7 billion
Two weeks ago: $0.5 billion
Three weeks ago: $7.2 billion
Four weeks ago: $12.1 billion

The average weekly tally for 2008 prior to the above period was $19.1 billion. This means that over the past five weeks, company bond issuance of just $25.7 billion is $69.8 billion below the norm, or a $267 billion shortfall on an annualized basis. If continued, the $6.45 billion of company bond sales over the past three weeks would result in a shortfall of $881 billion.

These figures are yet another compelling reason for the Fed to cut interest rates -- by tomorrow.; 10/06/2008 3:10 PM
Anonymous said...: The market appears to be well off its lows (the Dow is off 500 as I write this). I suspect the partial recovery is due to investors anticipating a coordinated rate cut before the markets open tomorrow.

It may be prudent to sell into any resulting rally.

Bruce; 10/06/2008 3:27 PM
Anonymous said...: Why wouldn't the GP's on some of these MLP's take them private. Wouldn't that be cheaper and smarter than paying a 17% distribution. Keep it for themselves...; 10/06/2008 3:34 PM
Anonymous said...: Because they realize that investors realize the LPs are considerably undervalued (i.e., a 30% premium on the stock isn't gonna cut it).; 10/06/2008 3:40 PM
Anonymous said...: I ran a rough calculation on my portfolio. If we stopped going down right here, MLPs never went up again and distributions froze at today's rate. I would need about 3 1/2 years and I would be at breakeven just from distros.

Glory!; 10/06/2008 3:43 PM
Anonymous said...: Anonymous said...
Because they realize that investors realize the LPs are considerably undervalued (i.e., a 30% premium on the stock isn't gonna cut it).

I would like to see someone try it!; 10/06/2008 3:44 PM
Anonymous said...: As T Boone Pickens would say, I'm now scratching a poor man's ass.; 10/06/2008 3:54 PM
Unknown said...: fierce snap back rally underway, reports that coordinated rate cut coming. Europe's fed funds counterpart is sitting at 4.5% while US is at 2%. Europe should be coming down a lot.; 10/06/2008 3:57 PM
Anonymous said...: Can someone who has been investing in MLPs for awhile help me out? I realize you may be down due to this market, but arent the pipeline companies pretty well guaranteed to make the underlying cashflow? I realize that funding is going to be challenge for some to do new projects but hell at these returns, 11% to 15% or more, who cares! They all have lines of credit and can tap that until the markets unfreeze.

Sooner or later all the hedgefunds and others getting hammered by redemptions all sell out and that leaves us bottom fishers with lots of upside and the yield until that happens.

Please if you have some comments on which MLPs present pretty stable cahsflows and relatively low risk, let me hear from you. I own a small portfolio of a bout 10 of these, but despite trying to read analyst reports I am finding it difficult to get that specific answer. Thanks for anyone who can help.; 10/06/2008 3:59 PM
Anonymous said...: I think its just a panic. There is absolutely no proof of credit not being supplied to MLPs or GPs. Buy some, clip 15%+ and let the fools keep selling.

Too many levered hedge funds getting margin calls being forced to liquidate. It has to end eventually...

I would stick to the large caps.; 10/06/2008 4:05 PM
Unknown said...: Large Caps? LIke OKS NS? Some names please.; 10/06/2008 4:06 PM
Anonymous said...: maybe it has more to do with the fact that they need bucks to continue to grow and pay out big distro's, and this is going to be tough to get going forward. bucks borrowed from banks or through additional stock sales. comps that have strong balance sheets and don't need credit

The hedge funds are forced to be liquidating and there are no buyers since we're in free fall. CNBC made this point several times today. The quote was something like - Everybody knows that hedge funds are being forced to liquidate. rrb and mary on the MWE board have said this time and time again.

Finally, there's panic out there; 10/06/2008 4:13 PM
Anonymous said...: The message that markets are telling Paulson and Bernanke is similar to the message Roy Scheider gave in the movie "Jaws"
when he realized how monsterously big the shark was.

"You're gonna need a bigger boat."

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Not in 4 weeks, now.

The Treasury is going to have to inject massive amounts of capital into the banks now ( in the form of an equity stake, perhaps preferreds or some other capital stake ), or the whole system is going to implode.

The reason that banks are hoarding cash is imho to fund lines of credit previously agreed upon that will be drawn down to pay back their corporate customer's commercal paper and other debt as it comes due.

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MLPs are Cheap or Expensive depending on your view of the future.

If we're heading into a deflationary depression, then MLPs are expensive ( so is every other stock ).

If somehow we muddle through then they are cheap.

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HS; 10/06/2008 7:03 PM