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January 11, 2013
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MLPs had another strong week, with the Alerian MLP Index rising 2.1%, compared with a 0.4% increase in the S&P 500. So far in 2013, the MLP Index is up 7 out of 8 days and a total of 7.4%. Oil and gas weren’t big movers, but NGLs were down sharply. So, while MLPs continue to feel the effects of beginning of the year fund flows and yield chasers, ethane and propane continue to suffer from an over-supply or under-demand, depending on your perspective.
This continued MLP strength is in the face of 3 follow-on offering totalling around $600mm in gross proceeds that priced this week, and nearly $1.0bn in MLP IPOs that are on the road, not to mention a slew of M&A and growth projects that were announced this week that will mean more capital funding in the future. I don’t remember seeing 3 MLP IPOs on the road at the same time, certainly not in January, given that MLP IPO market is generally slow to get started each year.
GLP went from biggest underperformer last week to biggest performer this week, up 11.6% on its announced 5 year agreement with Phillips 66 for use of some of its Bakken assets. TLLP and CLMT were down on their equity deals.
Small-cap, high beta MLPs are off to a very fast start in the first 8 trading days of the year, with last year’s biggest loser, OXF, leading the sector. TLLP leads the losers, but don’t expect that to last very long.
MLPs are out to an early lead on basically everything this year. Variable distribution MLPs have been mixed thus far, with strength in fertilizer MLPs balanced by weakness in the two variable refinery MLPs.
Debt – big week for debt, with $1.7bn pricing at some very nice coupon rates.
M&A / Growth Projects
Distribution Announcements:
That’s all for this week…GO PATS!