 |
|
| Dow | Nasdaq | About Us | Disclaimer |  |
RSS Feed |  |
Follow us on Twitter |
|
Featured Advisors |
Tuesday June 12, 2012
Linn Energy: High yield notes
by Roger Conrad, editor Utility Forecaster Producing oil and gas can be a volatile business. Since its January 2006 initial public offering, however, Linn Energy LLC (LINE) has locked in steadily rising cash flows -- whether oil has sold for less than $30 or more than $150 a barrel. Management has locked in prices for 100 percent of its projected natural gas production through 2017 as well as 100 percent of its liquids output through 2015. Meanwhile, it’s systematically reinvesting to grow production both at the drill bit and through acquisitions, such as the $1.2 billion purchase of Hugoton Basin assets from BP. Linn’s 51 percent first-quarter production boost is as good for credit quality as for distribution growth; the distribution has grown 9.9 percent over the last 12 months. And it’s proof positive the company deserves better than the B2 rating it draws from credit rater Moody’s. The silver lining is a low rating means a yield-to-call of more than 7 percent on Linn Energy LLC 8.625 Percent Note of 04/15/20 (CUSIP: 536022AC0). That’s the annual return investors will earn if the note is redeemed, or “called,” on Apr. 15, 2015, the first available date. Otherwise, bondholders can look for an annual return closer to 8 percent from holding until it matures in 2020. Only a bankruptcy can interrupt interest payments. And this bond’s claim is junior only to Linn Energy’s $2 billion credit line, on which just $75 million is currently drawn. The Linn Energy LLC 8.625 Percent Note of 04/15/20 is a new addition to our Conservative Income Portfolio. We recommend purchase up to $110 ($1,100). Learn more about this financial newsletter at Roger Conrad's Utility Forecaster. Related articles:
|
News Flash
|
|