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Analyzing Enterprise Products Partners’ Leverage

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EPD’s leverage

Enterprise Products Partners (EPD) targets a debt-to-adjusted EBITDA ratio of 3.5x for 2019. Its ratio was 3.5x for 2018 as well. A debt-to-EBITDA ratio of below 4.0x is considered conservative for MLPs. Enterprise Products Partners had $26.4 billion of total debt outstanding at the end of 2018.

The above graph shows Enterprise Products Partners’ debt-to-adjusted EBITDA ratio over the last six years. As the graph shows, the ratio rose from 2014 to 2016 mainly due to acquisitions. It’s been on a downward trend for two years.

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Enterprise Products Partners’ total debt, as well as equity, has risen over the last five years. The borrowings and proceeds from equity issuances were used mainly to fund its capital investments. Enterprise Products didn’t issue any units under its ATM (at-the-market) program in 2018. In January 2019, Enterprise Products Partners announced a $2 billion-unit buyback program.

Debt issuances

Enterprise Products issued $3.0 billion of senior notes in October 2018. The proceeds were used for, among other things, growth capital expenditures. The company issued $2.7 billion of notes in February 2018.

Credit ratings

Enterprise Products Partners’ long-term senior unsecured debt securities are rated “BBB+” by Standard and Poor’s, “Baa1” by Moody’s, and BBB+ by Fitch Ratings.

Next, we’ll take a look at the latest changes in short interest in Enterprise Products Partners stock.

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