PrefBlog

Brookfield Infrastructure Partners L.P. has announced:

that it has determined the fixed distribution rate on its Cumulative Class A Preferred Limited Partnership Units, Series 9 (“Series 9 Units”) (TSX: BIP.PR.E) for the five years commencing April 1, 2023 and ending March 31, 2028.

Series 9 Units and Series 10 Units

If declared, the fixed quarterly distributions on the Series 9 Units during the five years commencing April 1, 2023 will be paid at an annual rate of 6.642% ($0.415125 per unit per quarter).

Holders of Series 9 Units have the right, at their option, exercisable not later than 5:00 p.m. (Toronto time) on March 16, 2023, to reclassify all or part of their Series 9 Units, on a one-for-one basis, into Cumulative Class A Preferred Limited Partnership Units, Series 10 (“Series 10 Units”), effective March 31, 2023.

The quarterly floating rate distributions on the Series 10 Units will be paid at an annual rate, calculated for each quarter, of 3.00% over the annual yield on three-month Government of Canada treasury bills. The actual quarterly distribution rate in respect of the April 1, 2023 to June 30, 2023 distribution period for the Series 10 Units will be 1.88582% (7.564% on an annualized basis) and the distribution, if declared, for such distribution period will be $0.471455 per unit, payable on June 30, 2023.

Holders of Series 9 Units are not required to elect to reclassify all or any part of their Series 9 Units into Series 10 Units.

As provided in the unit conditions of the Series 9 Units, (i) if Brookfield Infrastructure determines that there would be fewer than 1,000,000 Series 9 Units outstanding after March 31, 2023, all remaining Series 9 Units will be automatically reclassified into Series 10 Units on a one-for-one basis effective March 31, 2023; or (ii) if Brookfield Infrastructure determines that there would be fewer than 1,000,000 Series 10 Units outstanding after March 31, 2023, no Series 9 Units will be reclassified into Series 10 Units. There are currently 7,986,595 Series 9 Units outstanding.

The Toronto Stock Exchange (“TSX”) has conditionally approved the listing of the Series 10 Units effective upon reclassification. Listing of the Series 10 Units is subject to Brookfield Infrastructure fulfilling all the listing requirements of the TSX.

BIP.PR.E was issued as a FixedReset, 5.00%+300M500, ROC, that commenced trading 2018-1-23 after being announced 2018-1-15. It is tracked by HIMIPref™ and has been assigned to the FixedResets subindex on the basis of its P-2(low) rating from S&P (it is not rated by DBRS).

Thanks to Assiduous Reader CanSiamCyp for bringing this to my attention!

Industrial Alliance Insurance and Financial Services Inc. has announced:

that it has sent today to all shareholders of its Non-Cumulative 5-Year Rate Reset Class A Preferred Shares Series I (the “Series I Preferred Shares”) a formal notice and instructions for the redemption of the Series I Preferred Shares outstanding as of today. Upon the Series I Redemption scheduled for March 31, 2023, iA Insurance will pay to the holders of the Series I Preferred Shares the redemption price of $25 less any taxes required to be withheld or deducted. There are 6,000,000 Series I Preferred Shares outstanding as of today.

Separately from the redemption price, the final quarterly dividend of $0.3000 per Series I Preferred Share will be paid in the usual manner on March 31, 2023 to shareholders of record on March 24, 2023. After the Series I Preferred Shares are redeemed, holders of Series I Preferred Shares will cease to be entitled to distributions of dividends and will not be entitled to exercise any rights as holders other than to receive the redemption price and the final quarterly dividend described above.

UPDATE, 2023-3-1: The company has issued a correction; the record date for the dividend is February 24, 2023. Thanks to Assiduous Reader xalier for his comment.

IAF.PR.I was issued as IAG.PR.I, a FixedReset, 4.80%+275, that commenced trading 2018-3-7 after being announced 2018-2-26. The ticker changed in 2019. It has been tracked by HIMIPref™ and is assigned to the FixedResets (Discount) subindex.

Thanks to Assiduous Readers DrSpinz, niagara and CanSiamCyp for bringing this to my attention!

BCE Inc. has announced:

that 3,635,351 of its 9,999,991 fixed-rate Cumulative Redeemable First Preferred Shares, Series AC (“Series AC Preferred Shares”) have been tendered for conversion on March 1, 2023, on a one-for-one basis, into floating-rate Cumulative Redeemable First Preferred Shares, Series AD (“Series AD Preferred Shares”). In addition, 351,634 of its 9,864,509 Series AD Preferred Shares have been tendered for conversion on March 1, 2023, on a one-for-one basis, into Series AC Preferred Shares. Consequently, on March 1, 2023, BCE will have 6,716,274 Series AC Preferred Shares and 13,148,226 Series AD Preferred Shares issued and outstanding. The Series AC Preferred Shares and the Series AD Preferred Shares will continue to be listed on the Toronto Stock Exchange under the symbols BCE.PR.C and BCE.PR.D, respectively.

The Series AC Preferred Shares will pay on a quarterly basis, for the five-year period beginning on March 1, 2023, as and when declared by the Board of Directors of BCE, a fixed cash dividend based on an annual fixed dividend rate of 5.08%.

The Series AD Preferred Shares will continue to pay a monthly floating adjustable cash dividend for the five-year period beginning on March 1, 2023, as and when declared by the Board of Directors of BCE. The monthly floating adjustable dividend for any particular month will continue to be calculated based on the prime rate for such month and using the Designated Percentage for such month representing the sum of an adjustment factor (based on the market price of the Series AD Preferred Shares in the preceding month) and the Designated Percentage for the preceding month.

BCE.PR.C is a FixedFloater that has been around for years. A conversion notice was sent in 2008 and it reset to 4.60%. About 55% was converted to BCE.PR.D. A conversion notice was sent in 2013 and it reset to 3.55%. A conversion notice was sent in 2018 and it reset to 4.38%. BCE.PR.C resets to 5.08% effective 2023-3-1.

BCE.PR.D is a RatchetRate preferred that was first issued by partial conversion from BCE.PR.C.

Manulife Financial Corporation has announced (although not yet on their website):

the applicable dividend rates for its Non-cumulative Rate Reset Class 1 Shares Series 11 (the “Series 11 Preferred Shares”) (TSX: MFC.PR.J) and Non-cumulative Floating Rate Class 1 Shares Series 12 (the “Series 12 Preferred Shares”).

With respect to any Series 11 Preferred Shares that remain outstanding after March 19, 2023, holders thereof will be entitled to receive fixed rate non-cumulative preferential cash dividends on a quarterly basis, as and when declared by the Board of Directors of Manulife and subject to the provisions of the Insurance Companies Act (Canada). The dividend rate for the five-year period commencing on March 20, 2023, and ending on March 19, 2028, will be 6.15900% per annum or $0.384938 per share per quarter, being equal to the sum of the five-year Government of Canada bond yield as at February 21, 2023, plus 2.61%, as determined in accordance with the terms of the Series 11 Preferred Shares.

With respect to any Series 12 Preferred Shares that may be issued on March 20, 2023 in connection with the conversion of the Series 11 Preferred Shares into the Series 12 Preferred Shares, holders thereof will be entitled to receive floating rate non-cumulative preferential cash dividends on a quarterly basis, calculated on the basis of the actual number of days elapsed in each quarterly floating rate period divided by 365, as and when declared by the Board of Directors of Manulife and subject to the provisions of the Insurance Companies Act (Canada). The dividend rate for the three-month period commencing on March 20, 2023, and ending on June 19, 2023, will be 1.80975% (7.18000% on an annualized basis) or $0.452438 per share, being equal to the sum of the three-month Government of Canada Treasury bill yield as at February 21, 2023, plus 2.61%, as determined in accordance with the terms of the Series 12 Preferred Shares.

Beneficial owners of Series 11 Preferred Shares who wish to exercise their right of conversion should instruct their broker or other nominee to exercise such right before 5:00 p.m. (Toronto time) on March 6, 2023. The news release announcing such conversion right was issued on January 31, 2023 and can be viewed on SEDAR or Manulife’s website. Conversion inquiries should be directed to Manulife’s Registrar and Transfer Agent, TSX Trust Company, at 1–800–783–9495.

The Toronto Stock Exchange (“TSX”) has conditionally approved the listing of the Series 12 Preferred Shares effective upon conversion. Listing of the Series 12 Preferred Shares is subject to Manulife fulfilling all the listing requirements of the TSX and, upon approval, the Series 12 Preferred Shares will be listed on the TSX under the trading symbol “MFC.PR.S”.

MFC.PR.J was issued as a FixedReset, 4.00%+261 that commenced trading 2012-12-4 after being announced 2012-11-27. After the 2018 notice of extension it reset to 4.731%; I recommended against conversion; and there was no conversion. Notice of extension was provided in 2023. The issue is tracked by HIMIPref™ and is assigned to the FixedReset (Discount) sub-index.

Enbridge Inc. has announced (on 2023-2-14):

that none of its outstanding Cumulative Redeemable Minimum Rate Reset Preference Shares, Series 19 (Series 19 Shares) will be converted into Cumulative Redeemable Preference Shares, Series 20 (Series 20 Shares) on March 1, 2023.

After taking into account all conversion notices received from holders of its outstanding Series 19 Shares by the February 14, 2023 deadline for the conversion of the Series 19 Shares into Series 20 Shares, less than the 1,000,000 Series 19 Shares required to give effect to conversions into Series 20 Shares were tendered for conversion.

ENB.PF.K was issued as a FixedReset 4.90%+317M490 that commenced trading 2017-2-11 after being announced 2017-12-4. The issue resets to 6.212% effective 2023-3-1. It is tracked by HIMIPref™ but has been relegated to the Scraps – FixedReset (Discount) subindex on credit concerns.

Thanks to Assiduous Reader CanSiamCyp for bringing this to my attention.

Enbridge Inc. has announced (on 2023-2-14):

that none of its outstanding Cumulative Redeemable Preference Shares, Series D (Series D Shares) will be converted into Cumulative Redeemable Preference Shares, Series E (Series E Shares) on March 1, 2023.

After taking into account all conversion notices received from holders of its outstanding Series D Shares by the February 14, 2023 deadline for the conversion of the Series D Shares into Series E Shares, less than the 1,000,000 Series D Shares required to give effect to conversions into Series E Shares were tendered for conversion.

ENB.PR.D is a FixedReset, 4.00%+237, that commenced trading 2011-11-23 after being announced 2011-11-14. It reset to 4.46% in 2018; I recommended against conversion; and there was no conversion. ENB.PR.D will reset to 5.412% effective 2023-3-1. The issue is tracked by HIMIPref™ but relegated to the Scraps – FixedReset (Discount) subindex due to credit concerns.

Update, 2023-2-18: An earlier version of this post quoted from and linked to the incorrect press release! This has been corrected – sorry about that!

Manulife Financial Corporation has announced (on 2023-1-31):

that it does not intend to exercise its right to redeem all or any of its currently outstanding 8,000,000 Non-cumulative Rate Reset Class 1 Shares Series 11 (the “Series 11 Preferred Shares”) (TSX: MFC.PR.J) on March 19, 2023. As a result, subject to certain conditions described in the prospectus supplement dated November 27, 2012 relating to the issuance of the Series 11 Preferred Shares (the “Prospectus”), the holders of the Series 11 Preferred Shares have the right, at their option, to convert all or part of their Series 11 Preferred Shares on a one-for-one basis into Non-cumulative Floating Rate Class 1 Shares Series 12 of Manulife (the “Series 12 Preferred Shares”) on March 19, 2023. A formal notice of the right to convert Series 11 Preferred Shares into Series 12 Preferred Shares will be sent to the registered holders of the Series 11 Preferred Shares in accordance with the share conditions of the Series 11 Preferred Shares. Holders of Series 11 Preferred Shares are not required to elect to convert all or any part of their Series 11 Preferred Shares into Series 12 Preferred Shares. Holders who do not exercise their right to convert their Series 11 Preferred Shares into Series 12 Preferred Shares on such date will retain their Series 11 Preferred Shares, unless automatically converted in accordance with the conditions below.

The foregoing conversion right is subject to the conditions that: (i) if, after March 6, 2023, Manulife determines that there would be less than 1,000,000 Series 11 Preferred Shares outstanding on March 19, 2023, then all remaining Series 11 Preferred Shares will automatically be converted into an equal number of Series 12 Preferred Shares on March 19, 2023, and (ii) alternatively, if, after March 6, 2023, Manulife determines that there would be less than 1,000,000 Series 12 Preferred Shares outstanding on March 19, 2023, then no Series 11 Preferred Shares will be converted into Series 12 Preferred Shares. In either case, Manulife will give written notice to that effect to any registered holders of Series 11 Preferred Shares affected by the preceding minimums on or before March 13, 2023.

The dividend rate applicable to the Series 11 Preferred Shares for the 5-year period commencing on March 20, 2023, and ending on March 19, 2028, and the dividend rate applicable to the Series 12 Preferred Shares for the 3-month period commencing on March 20, 2023, and ending on June 19, 2023, will be determined and announced by way of a news release on February 21, 2023. Manulife will also give written notice of these dividend rates to the registered holders of Series 11 Preferred Shares.

Beneficial owners of Series 11 Preferred Shares who wish to exercise their right of conversion should instruct their broker or other nominee to exercise such right before 5:00 p.m. (Toronto time) on March 6, 2023. Conversion inquiries should be directed to Manulife’s Registrar and Transfer Agent, TSX Trust Company, at 1‑800-783-9495.

Subject to certain conditions described in the Prospectus, Manulife may redeem the Series 11 Preferred Shares, in whole or in part, on March 19, 2028 and on March 19 every five years thereafter and may redeem the Series 12 Preferred Shares, in whole or in part, after March 19, 2023.

The Toronto Stock Exchange (“TSX”) has conditionally approved the listing of the Series 12 Preferred Shares effective upon conversion. Listing of the Series 12 Preferred Shares is subject to Manulife fulfilling all the listing requirements of the TSX and, upon approval, the Series 12 Preferred Shares will be listed on the TSX under the trading symbol “MFC.PR.S”.

MFC.PR.J was issued as a FixedReset, 4.00%+261 that commenced trading 2012-12-4 after being announced 2012-11-27. After the 2018 notice of extension it reset to 4.731%; I recommended against conversion; and there was no conversion. The issue is tracked by HIMIPref™ and is assigned to the FixedReset (Discount) sub-index.

Thanks to Assiduous Reader adp4646 for bringing this to my attention.

Way back in October, 2021, DBRS announced:

placed all the ratings of Algonquin Power & Utilities Corp. (APUC or the Company) Under Review with Developing Implications. On October 26, 2021, APUC announced an agreement with American Electric Power (AEP) to acquire Kentucky Power Company (Kentucky Power) and AEP Kentucky Transmission Company, Inc. (Kentucky TransCo) for a total purchase price of USD 2.846 billion, including the assumption of approximately USD 1.221 billion in debt (the Acquisition). Kentucky Power is a state rate-regulated electricity generation, distribution, and transmission utility operating within the Commonwealth of Kentucky, serving approximately 228,000 active customer connections and operating under a cost-of-service framework. Kentucky TransCo is an electricity transmission business operating in the Kentucky portion of the transmission infrastructure that is part of the Pennsylvania–New Jersey–Maryland regional transmission organization. The Acquisition is expected to close mid-2022, subject to regulatory approvals.

DBRS Morningstar views this acquisition as a positive development from a business risk perspective because of the following factors: (1) a significant increase in APUC’s low-risk regulated assets with a total consolidated rate base expected to increase to approximately USD 9 billion from USD 6.8 billion, which would reflect a 32% increase upon closing. After the completion of the Acquisition, DBRS Morningstar expects APUC to generate over 75% (currently 66%) of its consolidated cash flow from stable regulated operations and the remainder from long-term contracted nonregulated generation; (2) an expected improvement in jurisdictional diversification with the addition of Kentucky and the U.S. Federal Energy Regulatory Commission. Kentucky has a reasonable cost-of-service regulatory framework with acceleration of capital recovery and a reasonably regulated return on equity; (3) an expected improvement of capital expenditure planning, which should add more flexibility with the Acquisition.

Notwithstanding these potentially positive impacts, the Under Review with Developing Implications rating action reflects some uncertainties associated with APUC’s financing plan. To finance the Acquisition, APUC intends to issue up to USD 750 million common equity through a bought deal with the banks. APUC expects to finance the remainder in the amount of approximately USD 875 million with a combination of hybrid debt financing, equity units, and proceeds from the sale of the non-regulated assets/investments. DBRS Morningstar has reviewed APUC’s financing plan and is of the view that its current plan (if the hybrid debt is issued out of APUC) could increase APUC’s nonconsolidated leverage. The magnitude of the increase will depend on the amount of the hybrid debt to be issued. DBRS Morningstar notes that if APUC’s nonconsolidated debt-to-capital (as calculated by DBRS Morningstar) rises significantly above 20% following the issuance of the hybrid debt, then a negative rating action could be taken.

They have now announced:

DBRS Limited (DBRS Morningstar) removed the Issuer Rating and Preferred Shares rating of Algonquin Power & Utilities Corp. (APUC or the Company) from Under Review with Developing Implications and confirmed the ratings at BBB and Pfd-3, respectively. Both trends are Stable. The rating confirmations reflect DBRS Morningstar’s expectations that the proposed acquisition of Kentucky Power Company and AEP Kentucky Transmission Company, Inc. from American Electric Power (AEP) (collectively, KPC Acquisition) will close in the first half of 2023, and the financing of the KPC Acquisition will be implemented as currently planned. Following APUC’s January 2023 investor call and the latest information provided by the Company, DBRS Morningstar believes that even if the KPC Acquisition does not close, DBRS Morningstar does not expect a materially negative impact on APUC’s current credit profile.
…
DBRS Morningstar estimates EBITDA contribution from the low-risk regulated utility group accounted for approximately 70% of APUC’s consolidated 2022 EBITDA and the remainder from the power renewable generation group. Following the KPC Acquisition, DBRS Morningstar expects EBITDA contribution from the regulated utility group to increase to between 75% and 80%, significantly strengthening the business risk profile for APUC. Based on APUC’s current financing plan over the next few years, including the financing of the KPC Acquisition, DBRS Morningstar expects APUC to maintain solid consolidated metrics, as well as its nonconsolidated debt-to-capital ratio at a reasonable level (at around 20%) on a sustainable basis. DBRS Morningstar, however, could take a negative rating action if (1) APUC’s consolidated metrics weaken materially from the current level, or (2) its nonconsolidated debt-to-capital ratio increases significantly from the expected levels on a sustained basis, or (3) there is a significant increase in consolidated business risk profile.

Affected issues are AQN.PR.A and AQN.PR.D.

BCE Inc. has announced (on 2023-1-13):

Holders of fixed-rate BCE Inc. Series AC Preferred Shares have the right to convert all or part of their shares, effective on March 1, 2023, on a one-for-one basis into floating-rate Cumulative Redeemable First Preferred Shares, Series AD of BCE Inc. (the “Series AD Preferred Shares”). In order to convert their shares, holders must exercise their right of conversion during the conversion period which runs from January 15, 2023 until 5:00 p.m. (Eastern time) on February 20, 2023.
…
As of March 1, 2023, the Series AC Preferred Shares, should they remain outstanding, will pay, on a quarterly basis, as and when declared by the Board of Directors of BCE Inc., a fixed cash dividend for the following five years that will be determined by BCE Inc. on February 6, 2023 but which shall not be less than 80% of the five-year Government of Canada Yield (as defined in BCE Inc.’s articles) compounded semi-annually and computed on February 6, 2023 by two investment dealers appointed by BCE Inc. The annual dividend rate applicable to the Series AC Preferred Shares will be published on February 8, 2023 in the national edition of The Globe and Mail, the Montreal Gazette and Le Devoir and will be posted on BCE Inc.’s website at www.bce.ca.

With respect to BCE.PR.D, they announced:

Holders of floating-rate BCE Inc. Series AD Preferred Shares have the right to convert all or part of their shares, effective on March 1, 2023, on a one-for-one basis into fixed-rate Cumulative Redeemable First Preferred Shares, Series AC of BCE Inc. (the “Series AC Preferred Shares”). In order to convert their shares, holders must exercise their right of conversion during the conversion period which runs from January 15, 2023 until 5:00 p.m. (Eastern time) on February 20, 2023.
…
In order to exercise their conversion right in respect of all or part of their Series AD Preferred Shares, registered holders must provide a written notice thereof, accompanied by their Series AD Preferred Share certificates with the transfer form on the back thereof or other appropriate stock transfer power of attorney duly endorsed, and deliver them, at the latest by 5:00 p.m. (Eastern time) on February 20, 2023, to one of the following addresses of TSX Trust Company:…
…
As of March 1, 2023, the Series AD Preferred Shares, should they remain outstanding, will continue to pay a monthly floating dividend based on a dividend rate that will fluctuate over time between 50% and 100% of the Prime rate (“Prime”) for each month computed in accordance with the articles of BCE Inc. Accordingly, from March 1, 2023, the holders of Series AD Preferred Shares will continue to be entitled to receive floating adjustable cash dividends, as and when declared by the Board of Directors of BCE Inc., to be paid on the twelfth day of the subsequent month. The dividend rate will be adjusted upwards or downwards on a monthly basis by an Adjustment Factor (as described below) whenever the Calculated Trading Price, being the market price of the Series AD Preferred Shares computed in accordance with the articles of BCE Inc., is $24.875 or less or $25.125 or more, respectively. …

They have now announced:

BCE Inc. will, on March 1, 2023, continue to have Cumulative Redeemable First Preferred Shares, Series AC (“Series AC Preferred Shares”) outstanding if, following the end of the conversion period on February 20, 2023, BCE Inc. determines that at least 2,500,000 Series AC Preferred Shares would remain outstanding. In such a case, as of March 1, 2023, the Series AC Preferred Shares will pay, on a quarterly basis, as and when declared by the Board of Directors of BCE Inc., a fixed cash dividend for the following five years that will be based on an annual fixed dividend rate equal to 5.08%

BCE.PR.C is a FixedFloater that has been around for years. A conversion notice was sent in 2008 and it reset to 4.60%. About 55% was converted to BCE.PR.D. A conversion notice was sent in 2013 and it reset to 3.55%. A conversion notice was sent in 2018 and it reset to 4.38%. I recommended conversion.

BCE.PR.D is a RatchetRate preferred that was first issued by partial conversion from BCE.PR.C.

Thanks to Assiduous Reader newbiepref for bringing this to my attention

DBRS has announced that it:

has placed the ratings of TC Energy Corporation (TCC or the Company), TransCanada PipeLines Limited (TCPL; TCC’s wholly owned subsidiary), Nova Gas Transmission Limited (NGTL), and Trans Québec & Maritimes Pipeline Inc. (TQM) Under Review with Negative Implications. The ratings of NGTL and TQM are based on the ratings of TCPL. The rating actions follow the updated cost estimate of $14.5 billion (previously $ 11.2 billion) provided by the Company for the Coastal GasLink Project (the Project) with a potential for additional increases of $1.2 billion if construction extends well into 2024. While the Company is pursuing cost mitigants and recoveries, the process is unlikely to be completed before the Project is placed in service. DBRS Morningstar considers the increase in Project cost to be credit negative as the costs are materially higher than DBRS Morningstar’s previous expectation and will have to be fully borne by TCC through the construction period.

DBRS Morningstar’s ratings on TCC and TCPL are based on the expectation that TCC will maintain its overall financial risk profile in the “A” rating category. However, the increase in Project cost has reduced the Company’s financial flexibility, and TCC will have to depend on the successful execution of its proposed asset divestiture program to bridge the funding gap and maintain its financial risk profile. While the Company has an extensive portfolio of contracted assets with stable cash flows that could be monetized, the size of the divestiture program does entail execution and timing risks. In addition, the impact of the asset sales on cash flow and possibly the Company’s business risk profile is uncertain at this time.

DBRS Morningstar expects to resolve the Under Review Status after reviewing the Company’s updated financing plan and having more certainty with regard to the scope of the asset divestiture program. Despite the increase in Project cost, TCC’s rating is underpinned by its strong business risk profile, and DBRS Morningstar expects any negative rating action to likely be limited at most to one notch lower from the current ratings.

This follows the S&P announcement of 2023-2-1:

• TC Energy Corp. (TC) recently announced an updated cost estimate for its Coastal GasLink project. The increase of approximately C$3.3 billion will bring the estimated total cost of the project to C$14.5 billion. The increased project cost, to be realized over the remainder of construction, is in addition to the C$9.5 billion in 2023 capital expenditure (capex) that the company announced in November 2022.
• TC has indicated that it is committed to asset sales to fully fund its capital program and the increased costs of Coastal GasLink Project; however, the timing of these sales and the net impact on leverage and EBITDA are uncertain at this time.
• As a result, S&P Global Ratings revised the outlook to negative from stable and affirmed its ‘BBB+’ issuer credit rating on TC.
• The negative outlook indicates the uncertainty regarding the timing and amount of the anticipated asset sales necessary to ensure the company can achieve a debt-to-EBITDA ratio of less than 5.0x, consistent with the rating.

…
The negative outlook reflects the uncertainty regarding any asset sales in support of the company’s announced capital program as well as the increased costs at the Coastal GasLink project. Although we believe TC has assets that would be attractive to potential purchasers, it is not clear as to the impact on business risk of such sales or whether the ultimate amount and EBITDA impact of such sales will allow the company to reduce its leverage consistent with the rating. Based on our base-case assumption, we forecast debt to EBITDA of about 5.4x in 2023 and 5x in 2024.

We could lower the rating if we believe that the asset sales net of any EBITDA impact will not be sufficient to offset the company’s increased capex, including the higher costs at the Coastal GasLink project or any of the other projects, such that debt to EBITDA will remain above 5.0x or FFO-to-Debt will fall below 13% on a consistent basis.

We could revise the outlook to stable if we believe the company has undertaken sufficient asset sales or other credit positive measures such that debt to EBITDA will remain below 5.0x and FFO-to-debt will remain above 13% on a consistent basis.

Affected issues are TRP.PR.A, TRP.PR.B, TRP.PR.C, TRP.PR.D, TRP.PR.E, TRP.PR.F, TRP.PR.G, TRP.PR.H and TRP.PR.I.