MLPs for High Yield

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dan_s
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Joined: Fri Apr 23, 2010 8:22 am

MLPs for High Yield

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From Morgan Stanley: "MLPs rose 2.3% last week, while the S&P 500 went up 1.3% and energy stocks increased 0.8%. Last week, the Federal Reserve’s decision not to initiate tapering of quantitative easing measures surprised markets and contributed to the healthy MLP rally (+4.5% over two days). Some short covering may have contributed to the rise (see exhibit 34); top performers on the week were several of the big caps (EPD, WPZ, PAA, MMP…all up ~5 – 6%). The prospect of higher rates definitely raises the risk of a partial reversal of MLP fund flows, owing to less attractive relative yield and higher cost of capital for those dependant on capital market access to fund new growth investment. We continue to believe that a modest and gradual rise in interest rates should not be enough to offset the current secular growth characteristics (MSe for 11.1% median distr growth in 2014e) and attractive yields (MSe median 6.0%), but near-term trading volatility may present itself at times."

Dan: The midstream business is booming! In over 30 in this industry I have never seen it this good for the pipelines.
Dan Steffens
Energy Prospectus Group
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