Midstream MLP Energy Transfer (NYSE:ET) has priced their most recent fixed-to-floating rate preferred units with an initial 7.60% coupon—about as expected. The coupon will be fixed until 5/14/2024 at which point the coupon will float at the rate of 3 month Libor plus a spread of 5.161%. This spread is quite superior to the other 2 preferred unit issues that the company has outstanding–the currently outstanding issues have spreads of 4.738% and 4.53%.
The company will sell 28 million units–a fairly giant issue, with another 4.2 million units available for over allotment.
The issue is rated Ba2 by Moody’s and BB by Standard and Poor’s–not investment grade.
Dividends will be cumulative, but will not be qualified for favorable tax treatment. Of course there will be a K-1 issued to the investor at tax time.
The permanent ticker symbol will be ETP-E when the issue moves to the big board–in the meantime it will trade on the OTC Grey Market under the temporary ticker of ETPEP.
We will watch pricing tomorrow on the Grey Market and if it trades in the $24.75 area we will be buying for a shorter term potential 2% gain–into the $25.25–$25.40 area.