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MARKETS LIVE BLOG:

STOCKS TRADE HIGHER; DISNEY SINKS AFTER EARNINGS

Fed's Kashkari: Rates will stay high for 'extended period', can't rule out a hike

Valero Energy (VLO) Prices Senior Notes Worth $1.25 Billion

Zacks Equity Research
Updated

Valero Energy Corporation VLO recently announced the pricing of $1,250,000,000 aggregate principal amount of senior notes. The notes carry interest rate of 3.400% and are slated for maturity in 2026. The offering will be closed on Sep 12, 2016 on compliance with customary closing conditions.

The net proceeds from the offering will likely be utilized for general corporate activities. This includes financing the redemption of $750 million aggregate principal amount of senior notes and $200 million aggregate principal amount of senior notes. The $750 million senior notes carry an interest rate of 6.125% and are due in 2017. The $200 million senior notes carry an interest rate of 7.2% and are also scheduled to mature in 2017.  

San Antonio, TX-based Valero is a leading independent refiner and marketer of petroleum products in the U.S. It has a refining capacity of 3 million barrels per day with 15 refineries across the U.S., Canada and the Caribbean. The company posted adjusted second-quarter 2016 earnings of $1.07 per share that surpassed the Zacks Consensus Estimate of $1.01. Moreover, total quarterly revenue of $19,584 million handily beat the Zacks Consensus Estimate of $14,427 million.

However, the stringent policies to reformulate fuel and lower emission from refinery operations make the industry a highly regulated one. As a result, companies like Valero are often forced to divert cash flows to ensure regulatory compliance. This, in turn, can adversely impact profitability.

VALERO ENERGY Price

 

VALERO ENERGY Price | VALERO ENERGY Quote

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Valero currently carries a Zacks Rank #3 (Hold), which implies that the stock will perform in line with the broader U.S. equity market over the next one to three months.

Some better-ranked players in the energy sector include Matador Resources Company MTDR, NGL Energy Partners LP NGL and Midcoast Energy Partners, L.P. MEP. All the players sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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VALERO ENERGY (VLO): Free Stock Analysis Report
 
MIDCOAST EN PTN (MEP): Free Stock Analysis Report
 
NGL ENERGY PART (NGL): Free Stock Analysis Report
 
MATADOR RESOURC (MTDR): Free Stock Analysis Report
 
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Zacks Investment Research