DCP Midstream Prices Fixed-to-Floating Preferred

Giant Midstream MLP DCP Midstream (NYSE:DCP) has priced their new fixed-to-floating rate preferred with a coupon of 7.875%.  The coupon will be fixed until 6/15/2023.  After this date the coupon will float at 3 month Libor plus 4.919%.

The issue will generate a K-1 instead of a 1099.

The ticker on the permanent exchange will be DCP-B.  The shares will begin trading on the OTC Grey market under the ticker DCPMP.

The issue term sheet can be found here.


11 thoughts on “DCP Midstream Prices Fixed-to-Floating Preferred”

  1. Anyone buying this new one (DCPMP)? I see its trading in a range 24.50 to 24.70 so far. I’ve got an order in for 200 at $24.52.

    1. I like the new preferred with the current coupon rate. However, I’m just not sure what the rate will be when it starts to float. 3 month Libor is at 2.35% now, so the rate would be 7.27%. However, a year ago, the 3 month was only about 1.18%, which would mean a rate of about 6.10% if Libor gets that low again.

      1. And to compound the problem the drum beat of eliminating Libor grows…Most think its dead by 2021 anyways. What is the replacement? Most prospectus have a back up plan. But it does me little good because I dont know how that number will be determined.

  2. Hi Tim

    I’m interested in the issue. Will the distributions be considered qualified dividends for tax purposes?

    Thanks in advance.

    – Greg

    1. Hi Greg–I believe they will be NON qualified-virtually all MLP and REIT issues are non qualified.

  3. Those K-1 Forms clog up my taxes. I have to wait practically till mid-April for the company to get me mine.

    1. Stick it in an IRA and problem solved. You don’t even have to file. Turbotax asks me if it’s in an IRA, I say yes, they tell me I don’t have to do anything and ‘next’ item, please…

      1. I believe that is only true up to a certain dollar amount. Past that amount and there are tax consequences for holding a K-1 investment in an IRA that are a bit unpleasant.

        1. Yes, I know all about the UBTI issues, but I’d never own enough units to ever even come close to having to worry about that. I’ve still never seen the feds question anyone I know about K-1 related issues/taxes.

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