- Back in late 2021, Genesis Energy was staring down the barrel of a possible liquidity crisis as soon as early 2022.
- Thankfully, they came through in the eleventh hour with a divestiture that reduced their debt and thus pushed their leverage ratio below the covenant limit imposed by their credit facility.
- Whilst their cash flow performance improved during 2021, sadly their guidance for 2022 is disappointing with a slight decrease expected.
- When combined with their capital expenditure guidance, this stands to see their distribution payments entirely debt-funded during 2022.
- Considering their leverage remains very high, their distributions are still risky, and thus as a result, I still believe that a hold rating is appropriate.
For further details see:
Genesis Energy: Divestitures To The Rescue, 2022 Still Looks Disappointing