- Genesis Energy has been one of the heaviest impacted Master Limited Partnerships during this downturn, which has continued into the fourth quarter of 2020.
- This latest quarter saw their operating cash flow deteriorate versus the first nine months of 2020 despite general economic conditions improving.
- The more concerning issue is their very high leverage and the possibility that they will breach the leverage ratio covenant on their credit facility at the end of March 2021.
- Their leverage ratio is currently 5.57 and starting April 1st, the limit imposed by their credit facility is set to revert back to only 5.50, meaning that they need a quick earnings recovery.
- Since this deadline is now within 30 days and following another disappointing quarter, I believe that downgrading my rating to bearish is appropriate.
For further details see:
Genesis Energy: Less Than 30 Days Away From A Potential Covenant Breach