The MLP-Treasury Yield Spread Contracted Marginally in Q3



Yield spread

The yield spread between the Alerian MLP Index yield and the US ten-year Treasury yield contracted to 5.0% at the end of Q3 from 5.1% at the end of Q2. The AMZ yield fell until the middle of August but rose again to 8.0% at the end of Q3, the same level as at the end of Q2. However, the ten-year Treasury yield rose to 3.07% at the end of Q3 from 2.85% at the end of Q2. The rise in Treasury yield contributed to the shrinking of the spread between AMZ and the Treasury yield.

The above graph shows the AMZ-Treasury yield spread over ten years. It also shows the ten-year average spread. As the graph shows, the spread at the end of Q3 was ~40 basis points higher than the ten-year average spread.

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MLP yields

Enterprise Products Partners (EPD), MPLX (MPLX), Energy Transfer Partners (ETP), and Plains All American Pipeline (PAA), top MLPs by market capitalization, are currently trading at yields of 5.9%, 7.0%, 10.2%, and 4.7%, respectively. The SPDR S&P 500 ETF (SPY) is trading at a yield of ~1.7%, and the Alerian MLP ETF (AMLP) is trading at a yield of ~7.7%.

Learn which MLPs are trading at high yields in Which MLPs Offer the Highest Yields?

Learn about fund flows into top MLP ETFs in the third quarter in Fund Flows into Top MLP ETFs Fell in the Third Quarter.


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