PrefBlog

Dominion Bond Rating Service has announced that it:

has today downgraded the rating on the Medium-Term Notes & Unsecured Debentures of Enbridge Pipelines Inc. (EPI) to “A” from A (high) and the rating on the Medium-Term Notes & Unsecured Debentures of Enbridge Inc. (ENB) to A (low) from “A.” Both trends are Stable. These rating actions follow the announcement of the new Competitive Tolling Settlement (CTS), which would introduce volume and operational risks to EPI’s Enbridge System (Canadian Mainline), as described below. As a critical component of ENB’s operations (Canadian Mainline accounted for approximately one-third of ENB’s DBRS-adjusted earnings in 2010), the rating action on the long-term debt of EPI (100% owned by ENB) has resulted in a similar rating action on the long-term debt of ENB. The previous ratings did not allow for a fundamental change in volume sensitivity. While the final terms of the CTS must be approved by the National Energy Board (NEB), DBRS does not expect the full throughput protection of the current tolling methodology to be reinstated.

Concurrently, DBRS has confirmed the Commercial Paper (CP) ratings of EPI and ENB at R-1 (low) and ENB’s Cumulative Redeemable Preferred Shares (Preferred Shares) rating at Pfd-2 (low), all with Stable trends. The confirmation of ENB’s Preferred Shares reflects DBRS’s belief that the existing rating is already conservative relative to the long-term debt rating and that DBRS views it as unlikely that intermediate-ranking instruments will be issued in the future.

Enbridge has one preferred share issue outstanding, ENB.PR.A. This issue, a Straight Perpetual, is tracked by HIMIPref™.

This entry was posted on Thursday, March 17th, 2011 at 8:01 am and is filed under Issue Comments. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.