PrefBlog

Standard & Poor’s has announced:

• We are lowering our ratings on Westcoast Energy Inc., including our long-term corporate credit rating to ‘BBB’ from ‘BBB+’.
• We are also removing the ratings from CreditWatch, where they were placed with negative implications June 17, 2013.
• The ratings on Westcoast reflect those on parent Spectra Energy Corp.
• We downgraded Spectra to ‘BBB’ from ‘BBB+’ today, reflecting the drop-down of assets to subsidiary Spectra Energy Partners L.P.

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The ratings on Westcoast primarily reflect Standard & Poor’s view of parent company Spectra, as well as Westcoast’s “strong” business risk profile and “significant” financial risk profile. Furthermore, the credit profiles of both companies are very similar, in our view. Westcoast has what we believe is a diverse group of gas infrastructure assets that have a broad customer base, generate mostly fee-based revenue that reinforces stability, and benefit from regulatory protection to various degrees — all of which also support the strong business risk profile.

We have equalized our ratings on Westcoast with those on parent Spectra. We link the parent and operating company’s credit profiles based on our methodology for holding company structures. Accordingly, any rating action on Spectra would likely flow through to our ratings on Westcoast.

The stable outlook on Westcoast reflects that on Spectra.

The previous CreditWatch-Negative was reported on PrefBlog.

Westcoast is the proud issuer of two series of preferred shares, W.PR.H and W.PR.J, both Straight Perpetuals. Both are tracked by HIMIPref™ and both are currently assigned to the PerpetualDiscount subindex; both will be relegated to “Scraps” at the next index rebalancing at the end of November.

Interestingly, S&P affirmed UNG:

• We are affirming our ratings, including our ‘BBB+’ long-term corporate credit rating, on Union Gas Ltd.
• We are also removing the ratings from CreditWatch, where they were placed June 17, 2013.
• The rating action follows our downgrade to Spectra Energy Corp. to ‘BBB’ from ‘BBB+’ after the drop-down of assets to subsidiary Spectra Energy Partners L.P.
• Based on our ‘a-‘ stand-alone credit profile at Union Gas, the ‘BBB’ rating on Spectra Energy Corp., and our assessment of the regulatory insulation from the parent, we believe that a one-notch differential between the ratings on the parent and that on Union Gas is warranted.

Union Gas is the proud issuer of two preferred shares: UNG.PR.C and UNG.PR.D, which have been discussed in passing on PrefBlog, but neither is tracked by HIMIPref™. The commencement of CreditWatch-Negative status for UNG was reported on PrefBlog.

This entry was posted on Monday, November 4th, 2013 at 9:24 pm 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.