Enterprise Products Partners L.P. (EPD) announced that its operating subsidiary, Enterprise Products Operating LLC, has priced a public offering of $2.75 billion of senior unsecured notes. The notes comprise $800 million due Oct 15, 2019, $1.15 billion due Feb 15, 2025, $400 million due Mar 15, 2044, and $400 million due Oct 15, 2054. The company expects to use the net proceeds of the offering for the repayment of debt and for general company purposes.
The notes due in Oct 2019 will be issued at 99.981% of their principal amount and have a fixed-rate interest coupon of 2.55%. The notes due in Feb 2025 will be issued at 99.681% of their principal amount and have a fixed-rate interest coupon of 3.75%. The notes due in Mar 2044 will be issued at 100.836% of their principal amount and have a fixed-rate interest coupon of 4.85%. The notes due in Oct 2054 will be issued at 98.356% of their principal amount and have a fixed-rate interest coupon of 4.95%. The expected settlement date for the offering is Oct 14, 2014.
At second quarter end, the partnership had total debt outstanding of $18.4 million. As of Jun 30, Enterprise had consolidated liquidity of approximately $3.7 billion, which comprised $242 million of unrestricted cash on hand and approximately $3.5 billion of available borrowing capacity under revolving credit facility.
We continue to view Enterprise Products Partners as a core holding in an MLP portfolio, given its string of organic growth projects, potential acquisitions, strong balance sheet and solid liquidity position. The partnership is one of the major fully integrated midstream service providers with a positive long-term outlook, and has significant geographic and business diversity.
The partnership made a capital investment of around $697 million in the second quarter, and expects to bring $6 billion worth of major assets online through 2016. The key projects consist of two NGL fractionators at Mont Belvieu and Front Range NGL pipeline; extension of the Seaway crude oil pipeline; expansion of Mid-America Pipeline; the ATEX ethane pipeline and completion of the Eagle Ford crude oil pipeline. The successful execution of these projects will be value accretive and drive future cash flows.
Enterprise Products Partners continues to position itself to capitalize on NGL market dynamics by increasing its Eagle Ford shale exposure. Eagle Ford continues to be a growth driver for the partnership by offsetting volume weakness in other regions of the Mid-continent.
While we believe that Enterprise Products Partners has solid cash flow stability based on its quality pipeline, storage assets and geographic diversity, volume risk and commodity price exposure could weigh on its near-term results. We remain apprehensive of a volatile NGL pricing environment.
At present, Enterprise Products Partners carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same industry include Delek Logistics Partners LP (DKL), Spectra Energy Partners LP (SEP) and Sunoco Logistics Partners LP (SXL). Each of these stocks sports a Zacks Rank #1 (Strong Buy).
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