LNG Shipper GasLog Partners L.P. Sells a Nice Fixed to Floating Preferred
Added–GasLog Partners is taxed as a C Corp–as such a 1099 is issued.
LNG ocean shipper GasLog Partners L.P. has sold a new fixed-to-floating rate preferred with a nice coupon of 8.625%. While the issue is perpetual we have an interest in this issue.
GasLog Partners is a rather small partnership with a fleet of 10 LNG carriers. Unlike ocean shippers, such as dry bulk carriers, ownership of LNG ships has been highly profitable in recent times and is it is believed it will remain robust for the next 5 years. With the construction of new export capacity and reliquefaction facilities there is a need for carriers to move the liquid natural gas around the globe. Unfortunately in the future, as in all ocean shipping businesses, there will be ship oversupply, but it will be years from now before that occurs. Additionally, the demand for LNG is dependant upon the price of crude oil holding up and not plunging back into the $30/barrel area.
GasLog Partners has attempted to gain long term contracts for their ships which would be a positive for the profit stream. They have just recently purchased a ship from their sponsor, GasLog LTD, and it immediately went into the employ of Royal Dutch Shell for a period of 10 years.
We are interested in and will purchase shares of this issue. Like all shippers we will watch the financials closely and exit if we believe fundamentals are weakening in this shipping segment.
The coupon is fixed until 2027 after which it will float at 3 month Libor plus 6.31%. Fixed-to-floating rate issues have done quite well recently and we believe this issue will gain 2-4% in the next 3-6 months.
Shares are now trading on the OTC Grey market under the temporary ticker symbol of GSLGF. For those not familiar with the OTC Grey market we have a short primer here.
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