46 thoughts on “New Presentation from NuStar Energy”

    1. EBBNF is about $1.24 USD and EBGEF is going to be $1.343 effective next divi. But EBGEF wont reset until 2024 again. EBBNF will reset in 2022…EBBNF has a higher kicker and lower USTbill lock in. So potential for gain is there down road…Or not…Just based on your rate guessing ability come 2022 and 2024. I have them both. Also have EBGRF but that is a whole different ball of wax.

    1. EBGEF has been blocked. I bought it all online and now you cannot buy online or buy phone. Its a Vanguard decision…ERRAF is also unbuyable and TDUAF also now… But EBBNF is still tradeable which is basically a different version of EBGEF… Just randomness that a computer block puts on things I guess. ALTGF is tradeable also…

      1. Grid, Did they give you a reason? And of course makes you wonder if they want to renege on the purchase – or at least try to. Course they’d have to open the portal again if you want to sell.

        1. Alpha, from what they told me the reason they are blocking these are they dont like the adjustable float provision and currency risk… But they dont understand its the owner of the shares that get the possibility of conversion. And its only ever done if it benefits the owner. Very few Canandian resets have ever went adjustable and even then the original series stayed trading also. The currency risk is irrelevant as EBGEF has none. I just dont think they truly understand the issues and dont quite know what they are dealing with.
          Some of these are still trading like my Altagas and some other Enbridge issues to. I dont think their ticker trading blocker software is very good as just as many trade as dont. They just are caught off guard and dont understand what they are and how they are sneaking in from the trading houses.
          As far as trading goes, I am sure it would be no problem. Im not selling these anyways. And down the road I will be transfering them to TD anyways.

      2. If Vanguard will not allow a buy of EBGEF it seems to me that could have a negative effect on price with less potential buyer. Current price is down to 19.59.

        1. Danzeb, Yes Vanguard appears inconsistent in handling these type of pfds. But TD has an international markets trading desk with knowledgeable and seasoned reps through which EBGEF is liquid. Regardless of Vanguard not understanding what they’re dealing with, EBGEF remains an IG, QDI near 7%. It has few peers with those credentials. Any price weakness appears an opportunity as the fundamentals remain intact. Explanation for price variation might be found in adverse court ruling on a pipeline a few days ago. Only a bump in the road for this behemoth.

          1. Alpha, I will add, the real liquidity is provided by TSX. And is what it trades off of. These shares are not “boxed off” in illiquid format on OTC. They flow through seamlessly between OTC and TSX. I did a little test yesterday to humor myself. I purposely bought 17 shares of ERRAF at TSX market price. The shares transacted a few minutes later…On the TSX…I looked on a TSX stock website and it showed those 17 shares being bought on TSX at exact time it showed transacted on my TD account. So know, I abree with you, various brokerages allowing or disallowing trading of this will not effect pricing. These Enbridge and other prefereds were trading for years long before they just dribbled onto OTC recently.

            1. Grid, Alpha thanks for the info. It’s clearer to me now. As long as I see the dividend show up in my account I’m happy.

  1. Nustar was downgraded by Moodys on 2/09/18. The revolver has one covenant that Nustar’s debt to ebitda be no greater than 5.0x. The report goes on to say that an upgrade may occur if Nustar can maintain leverage sustainably below 4.5x. It appears that this is what they are trying to accomplish with the financial gymnastics. Maybe Moody’s won’t notice? Otherwise, with the debt that is maturing in 2020 and the capital expenditures needed, it does not appear that they have the FCF available to redeem NSS.

    1. That is right along my lines of thinking Pete…I remember early last year reading (either S&P or Moodys) that they were threatening to dissallow any new preferreds to be counted as capital on their ratings as they had papered over their finances so much with them. It damn near is 50/50 (common stock/preferred for capitalization) if my memory serves. That being said, it still appears the trend is their friend provided oil prices halfway cooperate.

  2. Mid stream has some risk but NS appears on a good path. In my opinion the preferred risk/reward is favorable and I have small amounts of both. The subordinated debt risk/reward looks even more favorable to me and I have a medium position. The debt is callable anytime. I expected call soon but this presentation was more cryptic about that than earlier ones so who knows. Unless the wheels come off the economy I’m good holding either. Disclosure: My weakness. I can be a sucker for big iron things like railroads and pipelines. Magic Jack and taxi cab insurance not so much.

    1. P, If you look at their debt coverage ratio, NSS and another revenue bond is completely removed as debt per terms of coverage ratio needed for its revolver line. Its like it doesnt even exist to get to their 4.03 times coverage ratio. This is why they have been slow for the hook and Libor has drifted down some taking pressure off. But the fact the preferreds are recovering is not a great thing for a long life for NSS.
      You dont like taxi cab insurance companies? Look at Atlas YTD returns for its common and baby bond. This company isnt in business to insure for losses….Its in business to ENSURE losses…for its investors.

      1. Grid, don’t get me started. The Underwriter firm should be called Lie, Cheat & Steal. Even Egan-Jones wouldn’t take money to rate that one.

      2. Grid, why the dislike for NSS? Last year, it was one of your fav’s, along with NS-A and NS-C. I know you flipped them all for Northern pastures – but they do seem to have recovered nicely from the end of year thrashing – especially NSS. You just don’t like the fuzzy math? Seems to me that they do what all MLP’s do with the goofy math games.

        1. A4I, I dont dislike it. I dislike myself for not sticking with original gameplan of selling if oil ever dipped below $50 last time.. In fact I succumbed to my weakness and bought again this morning a modest amount. But if oil goes under $50 I am out!
          I was just trying to explain their debt ratios arent as good as they seem. Not from here, but people on SA would look at that and their true bond yields and say this is getting called…It still hasnt happened yet over a year later. Its because their financials arent what they appear to be. They have too much high yield preferred as capitalization and NSS is being waved and treated as capital in effect even thoug its debt from its creditors. People were thinking they could just refinance this at 6% and save a mint. It just cant happen with all their covenent restrictions and cap ex. Plus they have a huge 2020 debt wall approaching. I suspect this will be dealt with first and just allow NSS to continue to be waved and treated as equity preferred by its creditors.

          1. All of that seems fair enough. I just don’t see how you can get hurt with NSS right now. If one is willing to buy ALL-E at a break-even price today (25.41 if you count the divvy coming up), I’d think that with NSS trading at par or a hair over, not even taking the interest/divvy into account – I’d be thrilled to add some NSS to the stable.

            I bought the heck out of ALL-E and NSS last year below par and my truck is full. If NSS gets yanked, I’ll revisit NS-A and NS-C again, but I’m not as content with them. I’d rather catch NI-B on the ex-date and ride the wave up while waiting for another opp to come in with the tide.

            1. This is just me, A4I, and nothing else…But I would never consider chosing between NSS or ALL-E. They come out of 2 separate money trading piles unrelated to each other. 🙂 I have my own personal unique system of money managment!

          2. Grid, getting 9.5% involves risk. These guys play in the MLP minor league. Not a sock drawer, but I like the risk/reward and my sock drawer is fully stocked. They were prohibited from calling NSS in 2018 by a bank covenant, not sure about now. I’ll take it while I can. If oil declines or if the veneer begins to peel off the economy it’s not good for this one.

            1. Were not disagreeing…Or I wouldnt have got back in…No, NS could have redeemed last year, but the covenant waved NSS from debt interest coverage ratios. This exclusion still applies. Look at the end of the presentation link Tim provided and you see they still magically waived the debt from coverage ratios of the credit revolver. The creditors agreed to waiver the debt as part of the interest coverage ratios. This is a plumb that gives NS the appearance of better coverage ratios.

              1. Grid, I agree with your assessment of coverage ratios. I’m pretty sure I saw reference to covenant in a old filing but it only covered 2018. Here’s another clue: unlike previous years, all the 2018 presentations stopped showing NSS as callable in 2018. I don’t know call status currently.

                  1. A4I, you are right but I was under impression a 2018 call was taken off the table by a revised bank covenant agreement. I am too lazy to go through everything to find it because as I recall it only applied to 2018 at the time anyway. Maybe callable today. I’ll watch for info to see if a covenant still applies, that I don’t know right now.

                    1. P, Im pretty sure you are confusing the covenant “waiver” with ability to redeem. It always has had the freedom to redeem, but mathematically it was “boxed in”. It could not issue a higher cap stack bond to redeem it or it would violate covenants, it didnt really have the cash per se because they are running cash flow negative from cap ex spend out. They just issued a private placed double digit preferred stock offering. So there really wasnt any benefit to redeem and reissue anything.
                      Creditors agreed to waive the treatment of the NSS payment as “interest payment”. Thus in creditors eyes it became preferred equity. And basically because of the 5 year deferral arrangement in propsectus it all but is except to the IRS.

                    2. Not sure about the covenant/waiver. I believe that they only owe us a 30 day notice – so we’ll just have to grin and bear it for now. Either way, I still feel that you just can’t really go wrong with it sitting near par and shedding cash like it does – and Grid’s concerns of oil sub $50 are also mitigated by the EIA’s forecasts for the price to remain well above that for the rest of 2019… Especially with the new Iran sanctions that are/may be – coming this month.

                    3. A4I, the convenant waivers have nothing to do with us, or with any 30 day redemption notice…. It is just between NuStar and Bank which allows the access to their massive credit revolver. That thing swallowed up a bond maturity last year and sat in the revolver for 6 months before they started to pare it down from an asset sale.
                      Credit revolvers are the life blood of a company. They have all sorts of freedom with that but the bank doesnt want their money at risk there either. Basically they felt they were worth the risk to allow the waivers to give the company breathing room.

                    4. If you go to page 39 of above link, you will better see what I am explaining…NSS showed 3.1 billion in debt…Then a bond and NSS were backed out of it and magically they had 2.7 billion in debt. Then they showed the 4x coverage ratio…This was after all that anove was backed out…So they still clearly are getting waivers on the debt for covenent purposes… This is more academic than anything to really worry about though.

              2. Grid, in any event the results are the same. They look boxed in for now, and I think they are good for the money for now. It’s got some risk but I like my chances better than Magic Jack (as seen on TV) and taxi cab insurance.

                1. Hey P…there’s really no reason to disparage the Magic Jack brand, or its current owner B Riley. Magic Jack is a commercially successful voice over internet protocol (VoIP) technology with over a dozen patents and lots of synergies with other B. Riley businesses. As opposed to Nustar whose fortunes seem tied to the price of oil, with diverse revenue streams B. Riley appears better structured to withstand industry downturns…and Magic Jack’s proprietary assets and intellectual property play an integral role in that business model.

                  1. Citadel, I agree that all things oil related can be very volatile. I wish you best of luck on the Magic Jack, it’s just not my thing.

                    1. No worries P…unlike miles of pipe and oil storage capacity, intellectual property and proprietary assets can sometimes be hard to quantify. In this case I think Riley B. is on the right path with their Magic Jack acquisition.

                    2. P, I missed it yesterday but not today. Got a slug of SCE-L at 20.65 today. Back in!

                    3. Grid, good for you. It was going like a yo-yo and I said that has Grid written all over it. Mine just sits while you make all the money. I haven’t had focus or unallocated cash to play with. I did some housekeeping this morning and took profits on some sketchier holdings I bought earlier this year. I’m pretty sure I got most of the meat off those bones. My version of a flip slow motion.

                    4. P, your right, there really isnt a lot gyrating and then throw in fact many are elevated to begin with leaves plenty of time for house keeping! I did buy a modest 400 more ERRAF at 6% today at $14.89 only for long term holding though.

                    5. Grid, I offered a little cash up north to TSX for Ser 1. Very disjointed process buying on TSX through Etrade. I think I bought some but still awaiting confirmation. Very disjointed process.

                    6. P, Vanguard has now put a block in on some of mine. I assume I could sell online (maybe not) but cannot buy online or on phone with some. They said they snuck through and will no longer allow it. They sited the conversion to float as reason. I suspect its currency related also…They dont understand process as the owners would have to determine the conversion and some resets just locked in for 5 more years. No big deal. Im looking to transfer that account to TD as soon as I get the motivation anyways.

                    7. Grid, my buy on the Series 1 did execute on the TSX at a little over 6.9% into an IRA. My Rep is aware account over the insurance limit and told will calve off a chunk to another firm if tax withhold and that takes care of that. I’ve been guaranteed by other firm there would be no tax withheld in IRA if the cusip is traded on TSX.

                    8. Good research, P. I suspect a lot of problems are eliminated by going TSX route dont you think? I just dont have access there.

                    9. Grid, I always bought direct TSX when I used to trade Canadian, you just need the cusip, in this case 29259N717. It’s usually a couple cents cheaper and can trade real time. The cusip keys directly to the security and not some variation of it. Etrade used to have a great foreign desk but they discontinued it. Clunkier process now but they got it done for $25. I didn’t know some brokers won’t do Canadian off TSX for you.

                    10. P, if they dont have an international operations they wont be able to trade it on TSX. I have 3 that tried…I knew they couldnt but I let them humor themselves anyways before they agreed they couldnt. One of them is Ally TradeKing and they barely can trade US preferreds though.

                    11. Grid, in my opinion being unable to trade Canadian is not real good if you want to trade Canadian. I don’t always buy Canadian, but when I do it’s Canadian, lol.

                    12. P, I really think the shares my shares are sliding through backdoor TSX as I never have any problems… For example today…Though I have bought at sub $19, I decided to top off tank 400 more shares of ALTGF at $19.75 today…Last trade was $19.75 on TSX. My order was filled immediately. I may have got scalped a penny a share on my additional ERRAF today currency converted but it is so close I cant say even that happened.
                      But I agree, if I was going in fuller throated outside of just playing Alta, Enbridge, Fortis, and CU, I would be better served having the flexibility you have.

                    13. P, My thesis is correct as I did a little test today and just looked to confirm…Before I bought my bigger purchase of ERRAF today, I did a 17 share test purchase. I just now looked from source I could get to now at home. That 17 share purchase showed up as a TSX trade at my time of purchase. So they are just flowing through to TSX where the liquidity is at. I dont have to wait for a random one of 10 people in US who hold these to decide to buy or sell say ALTGF to get the shares. They are coming off TSX exchange via an investment banker/brokerage. I knew I have had zero problems buying or selling but I hadnt linked with certainty the process.

                    14. Grid, probably won’t make much difference where you buy, and no need to research if it’s somehow derived from underlaying security. It’s all taxable so it’s all good. Expect a little scalping but probably not a lot. Buying off TSX might make sense only if you want into IRA, if you want to see TSX bid/ask before placing your bid, it’s a big enough order to offset the extra charge, and it doesn’t trade OTC. That was me today.

                    15. P, I just wanted to know where the liquidity was coming from. For $5 I got the definitive answer. Except for real liquid preferreds, bid and spread ask is largely irrelevant at Level 2 . One really needs to see the book at Level 3 for any real meaning.

Leave a Reply

Your email address will not be published. Required fields are marked *