QUANTUMONLINE.COM SECURITY DESCRIPTION: NuStar Logistics, L.P., 7.625% Fixed-to-Floating Rate Subordinated Notes due 2043, issued in $25 denominations, redeemable at the issuer's option on or after 1/15/2018 at $25 per note plus accrued and unpaid interest, and maturing 1/15/2043. The notes are guaranteed by NuStar Energy L.P. (NYSE: NS) and NuStar Pipeline Operating Partnership, L.P. (See our definition of Guaranteed in our Glossary of Income Investing Terms for the technicalities of the guarantee). Interest distributions at a fixed rate of 7.625% per annum ($1.90625 per annum or $0.4765625 per quarter) will be paid quarterly through 1/15/2018 on 1/15, 4/15, 7/15 & 10/15 to holders of record on the record date that will be 1/1, 4/1, 7/1 & 10/1 respectively (NOTE: the ex-dividend date is one business day prior to the record date). After 1/15/2018 distributions will be paid at the Three-Month LIBOR rate plus 673.4 basis points.
The company has the right, at any time, to defer dividend payments for up to 5 consecutive years (but not beyond the maturity date).
Distributions paid by these debt securities are interest and as such are NOT eligible for the preferential 15% to 20% tax rate on dividends and are also NOT eligible for the dividend received deduction for corporate holders.
The company may redeem the Notes prior to January 15, 2018 at a redemption price equal to the make-whole redemption price or after the occurrence of a Tax Event or a Rating Agency Event (see the prospectus for further information).
Units are expected to trade flat, which means accrued interest will be reflected in the trading price and the purchasers will not pay and the sellers will not receive any accrued and unpaid interest.
This security was rated as Ba2 by Moody’s and B+ by S&P at the date of its IPO. The Notes are unsecured, subordinated obligations of the company and will rank equally with all existing and future unsecured, subordinated indebtedness of the company. See the IPO prospectus for further information on the debt securities by clicking on the ‘Link to IPO Prospectus’ provided below.
