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CBRE Global Investors is the investment management division of CBRE Group, Inc. the world’s premier commercial real estate services and investment firm. The company’s shares trade on the New York Stock Exchange under the symbol “CBRE.”
October 14, 2013
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While the world awaits the inevitable last-minute deal out of Washington DC that might save the U.S. from a debt default, MLPs are having no trouble doing deals. Around $7.5bn worth of M&A deals were announced, and nearly $800mm of equity and $750mm of debt priced this week. Also, HCLP announced a settlement of the Baker Hughes lawsuit albatross. The MLP index was slightly lower week over week, allowing the S&P 500 to retake the YTD lead once again. 10-year treasuries remained steady, while gold and oil were down. Gold is now down nearly 30% in the last 12 months! Natural gas is once again creeping towards the elusive $4.00/mmbtu level, while ethane is still hovering around $0.25/gallon.
The cap of the MLP M&A hydrant is off and deals are gushing out at the moment. RGP announced that it would be buying PVR for $5.8bn including assumed debt in a stock for stock deal. So far in 2013 CPNO, PVR and CMLP have all found new dance partners, PNG is being bought back, and MMLP and AMID have new GP owners. That leaves very few remaining smallish midstream MLPs to be consolidated, until some of the recent private equity backed MLP IPOs get mature enough to be picked off by the big boys. Of those that are out there, all of them under $10bn in enterprise value have GPs and IDRs, which tend to complicate consolidations. EPB may eventually be consolidated into its much bigger brother KMP. BPL, MMP and MWE have no GP IDRs and could potentially be bought by some MLP, but each seems unlikely to sell out any time soon. Who do you think might be next? Leave a comment with your guess.
Last week I posted a 2 question survey. Thanks to everyone that answered. The results are interesting. The vast majority of respondents believe MLPs to be fairly valued, which I guess makes sense given the 15% YOY return for the index and the choppy trading since late May highs. In terms of what you readers are afraid of, it is a virtual dead heat between (1) some broad market sell off or external factor, (2) rising interest rates, and (3) MLP tax regulation changes. Oversupply of equity and persistently weak NGL prices were not very popular fears, which makes sense given those headwinds are somewhat self-correcting, or at least they have been historically.
This week I attended and “chaired” the 3rd annual Platts MLP Symposium. The content was very good, particularly the regulatory update panel that included 3 panelists joining by conference call from Washington DC. Senator Chris Coons couldn’t make it to Houston for the conference as scheduled, so he joined electronically as well to discuss the MLP Parity Act, which seems to have the most bearing on the future of Wind Energy companies at least until other alternative energy sources can become more competitive with fossil fuels.
I don’t have much else to say this week, although expect some very big announcements from me in the next few weeks on my future, the future of this blog, and my future state of residence…
Winners & Losers
After a few weeks of prices moving without many discernible catalysts, the top and bottom five this week saw their prices move as a direct result of actual news! SXE was up the most, but HCLP and PVR both had very good weeks as well on their big announcements. RGP was the big loser on the merger announcement, at least so far. The other player in the RGP deal, ETE, was up significantly on the announcement, but just flat week over week after sliding Monday and Tuesday. TLLP was down on the crude release that was announced this week.
We have a new leader for 2013 YTD, HCLP, which displaced PSE for the top spot this week. AMID jumped back into the top 5 after its strong week. On the bottom 5, SXE leapfrogged LINE into 3rd worst.
News of the (MLP) World
As mentioned above, the press releases were flying out this week.
EQUITY
DEBT
M&A / GROWTH PROJECTS
OTHER
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