Spectra Energy Partners L.P. #BBB+# Ratings Affirmed On Proposed Buy-In By Outlook Remains Negative

Stocks and Financial Services Press Releases Wednesday May 30, 2018 09:22
TORONTO--30 May--S&P Global Ratings

TORONTO (S&P Global Ratings) May 29, 2018--S&P Global Ratings today affirmed its 'BBB+' long-term corporate credit rating on Spectra Energy Partners L.P. (SEP), its 'BBB+' issue-level rating on the partnership's senior unsecured notes, and its 'A-2' short-term rating on SEP's commercial paper program. The outlook is negative.

Enbridge Inc. recently announced its proposal to acquire all of SEP's equity outstanding. The affirmation reflects our view that the transaction will increase the level of parental support from Enbridge, so we will likely revise our group assessment to core from highly strategic. Enbridge owns about 83% of SEP and after completion of the roll-up/buy-in, the partnership will become a wholly owned subsidiary of Enbridge. SEP is the gas platform in the Enbridge group and the primary growth vehicle for the gas business and is fully integrated and important to the group's strategy. With this transaction, Enbridge will have full control and influence. The parent expects to close the transaction by the end of the year; following the transaction's close, we will equalize the ratings on SEP with those on the parent.

The negative outlook reflects limited cushion in SEP's credit metrics following the FERC decision and U.S. federal tax reform, which we believe create a challenging operating environment for the partnership. In our base-case forecast, we expect SEP to maintain debt-to-EBITDA in the 4.0x-4.5x range during our two-year outlook period.

We could lower the rating if debt-to-EBITDA increases and stays above 4.5x, either through weaker financial performance, increased leverage, multiyear growth capital spending financed mostly with debt, or project delays that affect financial metrics. A negative rating action on ultimate parent Enbridge would result in a similar action on SEP. A downgrade to Enbridge could occur if FFO-to-debt stays below 13% or debt-to-EBITDA remains above 5.5x. This could follow weaker financial performance due to mainline volumes falling below expectations, or more aggressive funding of the large combined capital program throughout our outlook period.

We could revise the outlook to stable if financial metrics improve such that debt-to-EBITDA stays below 4.0x, which we believe would provide sufficient cushion below our 4.5x downgrade trigger. This could follow improved financial performance from incremental cash flows from newly commissioned projects or equity injection from the parent used to pay down debt. In addition, we will likely revise the outlook at SEP to stable to mirror that on parent Enbridge at the announced transaction's close.


Latest Press Release

SPRIMEs IPO First Day Trade Expects approximate yields of 7% for the first year, Confident over Suntowers Office Building and its prime location to connect businesses and growth

SPRIME's units are listed on the Stock Exchange of Thailand on the first day trade, expecting approximate yields of 7% for the first year (January 1 – December 31, 2019) to the unitholders. With confidence over the potential of the investment...

SET welcomes SPRIME REIT on Jan 23

The Stock Exchange of Thailand (SET) will list S Prime Growth Leasehold Real Estate Investment Trust worth THB 5.72 billion (approx. USD 173.26 million) on January 23, 2019, under the ticker symbol "SPRIME ". SET Senior Executive Vice President Manpong...

Empowering ASEAN 4.0 the ways forward to pursue and become ready for the transformation to the digital era

The ASEAN Business Advisory Council (ASEAN BAC) was inaugurated in April 2003 at the ASEAN Secretariat in Jakarta, Indonesia. Its establishment was mandated by the ASEAN Leaders at their 7th ASEAN Summit, November 2001 in Bandar Seri Begawan, Brunei...

Fitch Rates KTB Securities# THB Subordinated Debentures #BB-(tha)#

Fitch Ratings (Thailand) has today assigned a National Long-Term Rating of 'BB-(tha)' to KTB Securities (Thailand) Public Company Limited's (KTBST; BB(tha)/Stable) upcoming issue of up to THB400 million in subordinated debentures. The debentures will...

TMB reported 2018 net profit of THB11,601 mn, 34% increase from last year. Coverage ratio was raised to 152% in preparation for IFRS 9 implementation, reflecting the Banks prudent management.

TMB reported 2018 net profit of THB11,601 mn, 34% increase from last year. Coverage ratio was raised to 152% in preparation for IFRS 9 implementation, reflecting the Bank's prudent management. Moving toward 2019, the Bank will continue to further acquire...

Related Topics