Although the space is home to its fair share of winners and losers, the best-positioned names stand to benefit from ample demand for transportation and processing capacity to support growing production from prolific shale oil and gas plays. (See Talk of an MLP Bubble is Premature.)
In particular, America’s increasing capacity to export refined products, propane, butane and natural gas to international markets should support incremental production growth, spurring demand for additional midstream (pipelines and processing) and downstream (refining and marketing) capacity.
These solid growth prospects should gird MLPs against concerns that rising interest rates will diminish the value of their quarterly distributions to unitholders. Equally important, many of the contracts covering MLPs’ transportation assets include inflation-indexed escalators.