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Moody’s Investors Service has announced:

Moody’s changed the rating outlook on ENB to positive from stable and changed the rating outlook on EIF to positive from negative.
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The positive outlook at ENB reflects the improvement in its financial profile that is the result of several factors. First, EBITDA continues to grow as the company executes its large capital program. The company expects to bring into service about CAD22 billion of projects by 2020, of which by FYE 2018 about CAD7 billion will be generating cash flow. Second, assets sales totaling CAD7.5 billion, of which CAD5.7 billion have closed, is well above the target of CAD$3 billion announced late last year. The proceeds from these sales, combined with equity and equity-like issuance helped the company reduce its debt by about CAD$3 billion in the year to date as it progresses its large capital program. Prospectively, Moody’s sees the size of the capital program declining, both in nominal terms and relative to the size of the company, which reduces pressure on forecasted financial metrics.

Enbridge Inc’s (ENB) Baa3 ratings reflect the company’s large size and scale and its diverse, low risk asset base offset by high, but improving leverage and structural subordination. The company’s portfolio of assets will continue to generate stable cash flow based on a combination of rate regulation, a favorable contractual profile and a strong competitive position.
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EIF has seen its ratio of debt to EBITDA improve substantially to 4.4x over the last twelve months ending Sept 30 2018 from 6.1x at FYE2017 a key driver of the change in outlook to positive from negative. The improvement is a result of strong operating performance, completed projects generating cash flow, increasing tolls and corporate actions that have led to reduction in debt even as the company progresses its CAD$5.3 billion share of the twice delayed CAD$9 billion Line 3 Replacement (L3R) project.
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ENB What Could Change the Rating — Up

• Moody’s adjusted debt to EBITDA is sustained comfortably below 5.5x.

• A large reduction in its organizational complexity and structural subordination

ENB What Could Change the Rating — Down

• Moody’s adjusted debt to EBITDA is sustained well above 6x.

• Increases in structural subordination, more aggressive financial policies or a material change in the company’s business risk could also lead to a downgrade.

ENB is rated Pfd-3(high) [Stable] by DBRS and P-2(low) [Stable] by S&P.

Affected issues are (deep breath): ENB.PF.A, ENB.PF.C, ENB.PF.E, ENB.PF.G, ENB.PF.I, ENB.PF.K, ENB.PR.A, ENB.PR.B, ENB.PR.C, ENB.PR.D, ENB.PR.F, ENB.PR.H, ENB.PR.J, ENB.PR.N, ENB.PR.P, ENB.PR.T and ENB.PR.Y.

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