Sunoco Logistics Prices Senior Notes Worth $550 Million

Sunoco Logistics Partners Operations L.P., an affiliate of energy pipelines and terminals operator Sunoco Logistics Partners L.P. (NYSE:SXL) , announced the pricing of senior unsecured notes worth $550 million for a public offering. These notes have received a 'BBB’ rating from Fitch Ratings.

The issue price of these notes, due in 2026, will be 99.696% of the principal amount. Also, these will carry an interest rate of 3.90% per annum. The offering is scheduled to settle on Jul 12, 2016.

The partnership intends to use the proceeds from the aforesaid offering to pay for borrowings under its $2.50 billion revolving credit facility. The remainder will be used for general partnership purposes, which may include expansion capital expenditures. The partnership has estimated proceeds of approximately $544 million.

In May 2016, the partnership posted better-than-expected first-quarter 2016 results. Earnings per unit of 24 cents beat the Zacks Consensus Estimate of 21 cents. Strong performance by the Crude Oil Pipelines, Terminal Facilities and Product Pipeline segments led to the outperformance.

Philadelphia-based Sunoco Logistics, a master limited partnership, acquires, owns, and operates a geographically diverse portfolio of refined product and crude oil pipelines and terminal facilities. The partnership has a large diversified asset base that serves high-demand markets. However, weak demand for refined products and refinery downtime may pose challenges for Sunoco Logistics.

Sunoco Logistics currently carries a Zacks Rank #3 (Hold), which implies that the stock will perform in line with the broader U.S. equity market over the next one to three months.

Some better-ranked stocks in the Oil and Gas Production Pipeline MLP sector are Boardwalk Pipeline Partners, LP (NYSE:BWP) , Rose Rock Midstream, L.P. (NYSE:RRMS) and Enbridge Energy Partners, L.P. (NYSE:EEP) . While Boardwalk Pipeline Partners and Rose Rock Midstream sport a Zacks Rank #1 (Strong Buy), Enbridge Energy Partners holds a Zacks Rank #2 (Buy).