Enbridge has spent a lot of money:
Enbridge Inc. has signed a US$14 billion cash-and-debt deal that represents a major vote of confidence by the Canadian company in the future of natural gas.
The Calgary-based energy infrastructure giant said Tuesday it will purchase three U.S.-based utility companies – The East Ohio Gas Company, Questar Gas Company and its related Wexpro companies, and the Public Service Company of North Carolina – all of which are owned by Virginia-based Dominion Energy Inc.
Enbridge, which plans to finance the deal through a combination of US$9.4 billion of cash consideration and US$4.6 billion of assumed debt, said the deal will double the scale of its gas utility business and will serve to balance its asset mix evenly between natural gas and renewables, and liquids.
I’m not sure what the credit implications might be.
| HIMIPref™ Preferred Indices These values reflect the December 2008 revision of the HIMIPref™ Indices Values are provisional and are finalized monthly |
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| Index | Mean Current Yield (at bid) |
Median YTW |
Median Average Trading Value |
Median Mod Dur (YTW) |
Issues | Day’s Perf. | Index Value |
| Ratchet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.0874 % | 2,212.7 |
| FixedFloater | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.0874 % | 4,244.0 |
| Floater | 11.00 % | 11.39 % | 46,647 | 8.41 | 2 | 0.0874 % | 2,445.9 |
| OpRet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.3020 % | 3,331.0 |
| SplitShare | 5.07 % | 7.59 % | 41,588 | 2.31 | 7 | -0.3020 % | 3,977.9 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.3020 % | 3,103.7 |
| Perpetual-Premium | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.3291 % | 2,497.6 |
| Perpetual-Discount | 6.84 % | 7.04 % | 47,880 | 12.46 | 33 | 0.3291 % | 2,723.5 |
| FixedReset Disc | 6.07 % | 9.03 % | 98,479 | 10.80 | 55 | 0.4107 % | 2,073.4 |
| Insurance Straight | 6.89 % | 6.96 % | 58,798 | 12.68 | 17 | -0.0885 % | 2,611.1 |
| FloatingReset | 11.35 % | 11.41 % | 39,012 | 8.61 | 1 | -0.6143 % | 2,341.9 |
| FixedReset Prem | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.4107 % | 2,272.3 |
| FixedReset Bank Non | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.4107 % | 2,119.5 |
| FixedReset Ins Non | 6.39 % | 8.46 % | 117,717 | 10.99 | 11 | 0.1701 % | 2,247.4 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| SLF.PR.C | Insurance Straight | -2.40 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-09-05 Maturity Price : 16.30 Evaluated at bid price : 16.30 Bid-YTW : 6.85 % |
| PVS.PR.H | SplitShare | -1.72 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2027-02-28 Maturity Price : 25.00 Evaluated at bid price : 22.85 Bid-YTW : 7.59 % |
| POW.PR.C | Perpetual-Discount | -1.63 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-09-05 Maturity Price : 21.15 Evaluated at bid price : 21.15 Bid-YTW : 6.99 % |
| MFC.PR.C | Insurance Straight | -1.07 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-09-05 Maturity Price : 16.57 Evaluated at bid price : 16.57 Bid-YTW : 6.83 % |
| CU.PR.E | Perpetual-Discount | -1.07 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-09-05 Maturity Price : 17.56 Evaluated at bid price : 17.56 Bid-YTW : 7.04 % |
| CU.PR.D | Perpetual-Discount | -1.06 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-09-05 Maturity Price : 17.80 Evaluated at bid price : 17.80 Bid-YTW : 6.95 % |
| TD.PF.J | FixedReset Disc | 1.16 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-09-05 Maturity Price : 21.00 Evaluated at bid price : 21.00 Bid-YTW : 7.73 % |
| PWF.PR.T | FixedReset Disc | 1.33 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-09-05 Maturity Price : 18.26 Evaluated at bid price : 18.26 Bid-YTW : 8.80 % |
| BN.PR.X | FixedReset Disc | 1.49 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-09-05 Maturity Price : 13.61 Evaluated at bid price : 13.61 Bid-YTW : 10.23 % |
| BN.PF.H | FixedReset Disc | 1.56 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-09-05 Maturity Price : 19.55 Evaluated at bid price : 19.55 Bid-YTW : 9.80 % |
| TD.PF.K | FixedReset Disc | 1.77 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-09-05 Maturity Price : 21.52 Evaluated at bid price : 21.84 Bid-YTW : 7.64 % |
| BN.PR.N | Perpetual-Discount | 2.23 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-09-05 Maturity Price : 16.97 Evaluated at bid price : 16.97 Bid-YTW : 7.16 % |
| BN.PF.C | Perpetual-Discount | 2.63 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-09-05 Maturity Price : 17.19 Evaluated at bid price : 17.19 Bid-YTW : 7.22 % |
| CU.PR.I | FixedReset Disc | 2.71 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-09-05 Maturity Price : 20.86 Evaluated at bid price : 20.86 Bid-YTW : 8.65 % |
| PWF.PR.G | Perpetual-Discount | 3.12 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-09-05 Maturity Price : 21.15 Evaluated at bid price : 21.15 Bid-YTW : 7.09 % |
| BN.PF.D | Perpetual-Discount | 3.24 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-09-05 Maturity Price : 17.50 Evaluated at bid price : 17.50 Bid-YTW : 7.17 % |
| BIP.PR.F | FixedReset Disc | 5.67 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-09-05 Maturity Price : 19.02 Evaluated at bid price : 19.02 Bid-YTW : 9.05 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| BN.PF.D | Perpetual-Discount | 49,800 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-09-05 Maturity Price : 17.50 Evaluated at bid price : 17.50 Bid-YTW : 7.17 % |
| BN.PF.E | FixedReset Disc | 29,160 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-09-05 Maturity Price : 14.05 Evaluated at bid price : 14.05 Bid-YTW : 11.04 % |
| MFC.PR.K | FixedReset Ins Non | 19,830 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-09-05 Maturity Price : 20.00 Evaluated at bid price : 20.00 Bid-YTW : 7.80 % |
| GWO.PR.I | Insurance Straight | 19,000 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-09-05 Maturity Price : 16.35 Evaluated at bid price : 16.35 Bid-YTW : 6.90 % |
| NA.PR.C | FixedReset Disc | 13,830 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-09-05 Maturity Price : 23.10 Evaluated at bid price : 24.65 Bid-YTW : 7.45 % |
| BN.PF.C | Perpetual-Discount | 12,600 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-09-05 Maturity Price : 17.19 Evaluated at bid price : 17.19 Bid-YTW : 7.22 % |
| There were 5 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| BN.PF.F | FixedReset Disc | Quote: 15.75 – 19.00 Spot Rate : 3.2500 Average : 1.7940 YTW SCENARIO |
| CU.PR.I | FixedReset Disc | Quote: 20.86 – 23.75 Spot Rate : 2.8900 Average : 2.2636 YTW SCENARIO |
| CU.PR.C | FixedReset Disc | Quote: 17.06 – 18.50 Spot Rate : 1.4400 Average : 0.8812 YTW SCENARIO |
| POW.PR.G | Perpetual-Discount | Quote: 20.10 – 21.15 Spot Rate : 1.0500 Average : 0.6027 YTW SCENARIO |
| IFC.PR.C | FixedReset Disc | Quote: 17.70 – 18.75 Spot Rate : 1.0500 Average : 0.6560 YTW SCENARIO |
| BN.PR.M | Perpetual-Discount | Quote: 16.75 – 17.37 Spot Rate : 0.6200 Average : 0.3906 YTW SCENARIO |
“I’m not sure what the credit implications might be.”
Apparently, Moodys already has figured that out (no doubt, after doing their usual an in-depth 30 minute review of the implications):
‘Ratings agency Moody’s swiftly downgraded the outlook for Enbridge and four subsidiaries to negative from stable, saying the deal would add pressure to an “already weak financial profile that we expect to persist following the transaction close.”
The modest improvement in Enbridge’s business risk profile is not enough to “offset ongoing pressure on the company’s financial profile,” said Gavin MacFarlane, vice president and senior credit officer at Moody’s, in a statement.’
https://www.reuters.com/markets/deals/enbridge-buy-three-utilities-deal-valued-14-bln-2023-09-05/
Amazing how brilliant those analysts are at Moodys!
Outlook Negative from S&P.
To be fair, the Credit Rating Agencies have probably been privy to at least the outlines of this deal for a while. They have access to material non-public information that the rest of us don’t get.
Now with BOC holding rates, is it time to sell floating and RR and move to perpetual?
Enbridge news sucks. Hold a significant amount.
Now with BOC holding rates, is it time to sell floating and RR and move to perpetual?
See the discussion of RY.PR.J in the introduction to MAPF Performance: August, 2023. There’s a significant buffer of excess predicted yield in discounted FixedResets right now, enough to withstand a decline of GOC-5 to more moderate levels while still maintaining FixedReset yield in excess of PerpetualDiscount (on average; there will be exceptions of course). But I’m certainly not going to guarantee that buffer will be sufficent to make this true in perpetuity!
So pays yer money and takes yer chances!