Down over 5 points now on the day for the mlp index and 14 mlps are down 1 point or more including all the large cap members of the index. Oneok (OKS) Enbridge (EEP) Sunoco Logistics (SXL) and Plains All American showing losses of 1.50 or more.
Linn Energy (LINE) priced its offering at 16.25. The stock is unchanged.
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- joewxman
- a meteorologist with a knack for trading and investing in MLPS! I also like horse racing, enjoy cigars and a good port wine.
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2 comments:
Is the party over?
Lee
On this horrid day, I thought I'd write a Bond Market Update.
The Corporate Bond market has come a long way towards healing in 10 weeks.
Although 10 year subordinated bank debt is unlikely to yield 5.5% any time soon ( as it did 2 years ago ), Yields might eventually stabilize as low as 7.0-7.5% for typical subordinated 10 year bank debt.
I use a screen ( at Ameritrade's bond site ) of 9% yield and 85% of par for corporates BBB- or better.
10 Weeks ago, this screen would return over 2000 bond offers, a few minutes ago today there were 189 ( all maturities through 2099 ).
If one eliminates the miss-rated bonds priced for Bankruptcy (AIG, AIG Related, SLM, and GNW... there were exactly 70 bonds offered compared to about 1400 offers ( 2000 offers - 600 miss-rated for BK ) about 10 weeks ago.
Of the 70 bonds remaining some I would not consider investable in this market as they are Bank subordinated debt ( I would guess about 30 are subordinated Bank debt ). That leaves about 40 bond offers.
10 weeks ago Hartford (HIG) bonds were yielding over 15.5%. 013817AS0
The best yielding HIG Bond offering is:
416515AV6
547
5 HARTFORD FINL SVCS GROUP INC
Non Callable, Make Whole Calls 6.000 01-15-2019
Baa3/BBB
Moody's Report 10.853
Mat 71.381
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Alcoa Bonds Yielded abpout 14% 10 weeks ago,
today the best AA bond Yield offering is:
013817AS0
Industrial 500
5 ALCOA INC
Non Callable, Make Whole Calls, Spec Redemp, NYBE 6.750 07-15-2018
Baa3/BBB-
Moody's Report 9.477
Mat 83.531
------------------------------
Citibank ( Used to be on the miss-rated with AIG on my priced for BK list) with 18% yields 10 weeks ago, now a typical offer for Citibank's SUBORDINATED debt is
172967BW0
Financial 150
10 CITIGROUP INC
Non Callable, NYBE, C 4.875 05-07-2015
Baa1/A-
Moody's Report 9.331
Mat 79.949
I'd think that Citigroup bank debt is risky enough but subordinated Citibank debt yielding only 9.331%!
http://cxa.marketwatch.com/finra/BondCenter/BondDetail.aspx?ID=MTcyOTY3Qlcw
---------------------------------
How does this effect MLP's?
Fixed income investors are taking on risk, accepting much lower yields than they did 10 weeks ago.
This means that credit will be more available ( though more expensive than in 2007 for MLPs ) taking BK off the table for now.
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