Why EnLink Midstream Partners’ Leverage Is Rising
EnLink Midstream Partners (ENLK) ended 2Q17 with a total outstanding debt of $3.6 billion—11.1% higher than the outstanding debt at the end of 2016. The increase in the partnership’s outstanding debt could be due to funding for organic projects. EnLink Midstream Partners has $1.3 billion of liquidity under its credit facility as of June 30, 2017.
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Net debt-to-adjusted EBITDA
EnLink Midstream Partners’ net debt-to-adjusted EBITDA multiple stood at 4.5x by the end of 2Q17. It’s higher than the leverage (4.2x) at the end of 2016. The partnership’s increased leverage is due to increased capital spending. The EBITDA increased at the same rate.
EnLink Midstream Partners’ leverage is still within the industry standards. MLPs generally target a ratio between 4.0x to 4.5x. EnLink Midstream Partners’ leverage position is better compared to Energy Transfer Partners (ETP), Williams Partners (WPZ), and DCP Midstream (DCP).
In the next part, we’ll analyze EnLink Midstream Partners’ current valuation.