Dynagas LNG Partners LP Declares Cash Distribution on Its Series B Preferred Units
- None.
- None.
Insights
The declaration of a cash distribution for Dynagas LNG Partners LP's Series B Preferred Units reflects a significant aspect of shareholder returns, particularly for income-focused investors. The transition from a fixed to a floating distribution rate is indicative of the broader market shift following the discontinuation of LIBOR rates. The Term Secured Overnight Financing Rate (SOFR) has become a common benchmark for floating rates, reflecting a more transparent and risk-free rate compared to LIBOR.
The distribution rate of 11.232630% is considerably higher than the average dividend yield in the energy sector, which could signal an attractive yield for investors, but also raises questions about the sustainability of such payouts. Investors should consider the company's ability to maintain high distribution rates in the context of fluctuating energy markets and potential changes in financing costs as influenced by the SOFR.
The LNG market is influenced by global energy demand, geopolitical factors and environmental policies. As an operator of LNG carriers, Dynagas is positioned within a sector that is experiencing growth due to increased demand for cleaner energy sources. The cash distribution announcement may positively influence investor sentiment, as it suggests confidence by the board in the company's financial health and profit distribution policies.
However, investors should be cautious and analyze the company's financials in relation to its distribution payouts. High distribution rates can be a double-edged sword if they are not supported by a strong balance sheet and consistent cash flows. Given the volatility in energy prices and the capital-intensive nature of the shipping industry, it's important to assess whether the current distribution level is sustainable in the long term.
The switch from a fixed to a floating distribution rate, pegged to the SOFR, reflects broader economic trends towards more stable and reliable financial benchmarks. This move aligns with regulatory guidance post-LIBOR and could potentially offer a more predictable and transparent mechanism for investors to anticipate returns, adapting to interest rate changes in real time.
However, the floating rate exposes investors to interest rate risk, which may be of particular concern in an environment of monetary policy tightening. As central banks raise rates to combat inflation, the cost of debt for companies like Dynagas could increase, potentially affecting their cash flow and ability to sustain such distributions. Investors should monitor macroeconomic indicators and central bank policies as they relate to interest rate movements and the impact on floating-rate securities.
ATHENS, Greece, Feb. 01, 2024 (GLOBE NEWSWIRE) -- Dynagas LNG Partners LP (the “Partnership”) (NYSE: DLNG), an owner and operator of liquefied natural gas (“LNG”) carriers, today announced that its Board of Directors has declared a cash distribution of
Effective as of November 22, 2023, in accordance with the terms of the Series B Preferred Units, the distribution rate for the Series B Preferred Units changed from fixed to floating, and is equal to the Term Secured Overnight Financing Rate for the applicable three month tenor published by the Chicago Mercantile Exchange plus the credit spread adjustment of
The cash distribution is payable on February 22, 2024 to all Series B Preferred Unitholders of record as of the close of business on February 14, 2024.
Distributions on the Series B Preferred Units are payable quarterly in arrears on the 22nd day (unless the 22nd day falls on a weekend or public holiday, in which case the payment date is moved to the next business day) of February, May, August and November of each year, when, as and if declared by our Board of Directors. This is the twenty-first sequential cash distribution on the Series B Preferred Units since they began trading on the NYSE.
The Partnership has 2,200,000 Series B Preferred Units outstanding as of the date of this press release.
About Dynagas LNG Partners LP
Dynagas LNG Partners LP (NYSE: DLNG) is a master limited partnership which owns and operates LNG carriers employed on multi-year charters. The Partnership’s current fleet consists of six LNG carriers, with aggregate carrying capacity of approximately 914,000 cubic meters.
Visit the Partnership’s website at www.dynagaspartners.com
Contact Information:
Dynagas LNG Partners LP
Attention: Michael Gregos
Tel. +30 210 8917960
Email: management@dynagaspartners.com
Investor Relations/ Financial Media:
Nicolas Bornozis/Markella Kara
Capital Link, Inc.
230 Park Avenue, Suite 1540
New York, NY 10169
Tel. (212) 661-7566
E-mail: dynagas@capitallink.com
Forward-Looking Statements
Matters discussed in this press release may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts.
The Partnership desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. The words “believe,” “anticipate,” “intends,” “estimate,” “forecast,” “project,” “plan,” “potential,” “may,” “should,” “expect,” “expected,” “pending” and similar expressions identify forward-looking statements.
The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, examination by the Partnership’s management of historical operating trends, data contained in its records and other data available from third parties. Although the Partnership believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond the Partnership’s control, the Partnership cannot assure you that it will achieve or accomplish these expectations, beliefs or projections.
In addition to these important factors, other important factors that, in the Partnership’s view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies and currencies, general market conditions, including fluctuations in charter rates and vessel values, changes in demand for Liquefied Natural Gas (LNG) shipping capacity, changes in the Partnership’s operating expenses, including bunker prices, drydocking and insurance costs, the market for the Partnership’s vessels, availability of financing and refinancing, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents or political events, vessel breakdowns and instances of off-hires and other factors. Please see our filings with the U.S. Securities and Exchange Commission for a more complete discussion of these and other risks and uncertainties. The information set forth herein speaks only as of the date hereof, and the Partnership disclaims any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this communication.
FAQ
What is the cash distribution per unit declared by Dynagas LNG Partners LP for the Series B Preferred Units?
How is the distribution rate for the Series B Preferred Units determined?
When is the cash distribution payable to the Series B Preferred Unitholders?
How many Series B Preferred Units does Dynagas LNG Partners LP have outstanding?
