Fitch reckons U.S. diversified, midstream and MLP industries have sufficient liquidity

Financials
Source: DollarPhotoClub

North American diversified and midstream companies and master limited partnerships (MLPs) have sufficient liquidity as issuers benefit from the current credit environment to maintain stable profiles, according to a Fitch Ratings report.

Many companies in these sectors have large planned infrastructure projects, driven mainly by investments related to the shale revolution. Companies will need to have ample liquidity to make these investments and the issuers Fitch evaluated appear to have adequate borrowing capacity.

In Fitch’s view, the individual sectors’ debt maturity schedules are manageable over the next several years. The sectors have an average of 4% of total debt due each year between 2014 through 2016, while the majority of revolving bank facilities are committed through 2018.

Fitch also notes that the sectors have taken advantage of the low-cost interest rate environment and access to capital, with issuers active with new bond offerings used to term-out revolver borrowings.

Fitch’s conclusions are based on an analysis of eight diversified and midstream issuers and 16 MLP issuers. Fitch views this sample as representative of the industry as a whole.

The full report ‘Liquidity Review: Pipelines, Midstream and MLPs’ is available at ‘www.fitchratings.com.’

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