a blog dedicated to the discussion of MASTER LIMITED PARTNERSHIPS and the day to day news related to the group...along with perhaps a few other things...as long as the conversation is kept civil. Although i have no problem telling you what i am doing regarding my trades...PLEASE DON'T ASK ME WHAT YOU SHOULD DO REGARDING WHETHER TO BUY, SELL OR SHORT!!! i am not in the stock business.
Friday, June 27, 2008
Oil soaring up 3 dollars...dow down 150. Rubber band getting stretched in here.
They won't do that until the yields get over 10. Then it becomes accretive to do so. That's why Atlas stopped dropping when it was yielding exactly 10. If it gets higher, one of the major MLPs would buy it.
Of course no one will touch CLMT (sitting at 12%) until they are sure the convenants aren't going to be broken.
PAA bought PPX when it was yielding around 8% a couple of years ago. You need synergies for acquistions to work in addition to assets being cheap, and there are a lot of cheap assets out there now.
If MLP's are so cheap, why aren't MLP's acquiring other MLP's???
ReplyDeleteThey won't do that until the yields get over 10. Then it becomes accretive to do so. That's why Atlas stopped dropping when it was yielding exactly 10. If it gets higher, one of the major MLPs would buy it.
ReplyDeleteOf course no one will touch CLMT (sitting at 12%) until they are sure the convenants aren't going to be broken.
I'm not sure where you got your "rule of 10".
ReplyDeletePAA bought PPX when it was yielding around 8% a couple of years ago. You need synergies for acquistions to work in addition to assets being cheap, and there are a lot of cheap assets out there now.
There may be cheap assests but the cost of capital has gone up so when PAA bought PPX they had access to much cheaper money.
ReplyDeleteObviously 10 isn't a magic number, my point was that is probably a minimum before deals would happen.
Point taken, although the KMP's and EPD's of this space still have pretty good access to reasonably cheap capital.
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