Another drop in fractionation spreads last week is a negative driver for gas processing MLP names.
Last week, the yield on the ten year US Treasury moved up 20 bps, resulting in a short-term negative catalyst for MLPs which are rate-sensitive.
Last week the spread between BBB corporate credit and MLP yields tightened, however, the difference in yields between the asset classes remains wide from a historical perspective.
Propane prices moved 2% higher for the week ended March 8, resulting in a short-term negative for propane distributors.
The third colder than normal week in a row should benefit propane distribution companies such as AmeriGas, Ferrellgas, and Suburban Propane.
Lower propane prices on the week were a positive catalyst for distributors of propane such as AmeriGas, Ferrellgas, and Suburban Propane.
Last week’s colder than normal weather was a positive short-term catalyst for propane distributors as colder weather drives higher propane demand for home heating.
Lower Treasury rates last week could be a positive short-term catalyst for MLP stocks which are rate-sensitive.
Fractionation spreads last week fell again, in a negative short-term catalyst for gas processing MLPs.
Last week, the spread between the Alerian MLP Index and the BofAML BBB Corporate Credit Index widened very slightly by one basis point in a short-term neutral for the relative value between the two. From a medium-to-long term perspective, the spread is much higher than average, making MLPs appear cheap to corporate credit.
North Dakota oil production continued its trend of rapid growth in December 2012, resulting in a positive long-term indicator for midstream names with assets in the area.
Last week’s movement in commodity prices caused frac spreads to decline, a short-term negative catalyst for gas processor stocks.
Corporate credit continues to trade far inside the Alerian MLP Index, providing a potential relative value opportunity if one believes that the spread between the two will revert to historic norms.
Colder than normal weather last week resulted in a positive data point for propane distributors.
Last week’s slight downward movement in Treausry yields is a theoretical positive for MLP stocks, which are often sensitive to interest rates.
Propane prices are a major factor in the margins of propane distribution companies, with lower prices working to the companies’ advantage.
Another week of warmer than normal weather could put pressure on propane distributors’ margins.
Increasing propane exports should help provide some support to propane prices, which have dropped steeply since 2H11.
A movement down in most NGL prices last week was negative for gas processing MLPs.
Warmer weather last week was a negative for propane distributors such as APU, SPH, and FGP.