Enbridge Rating Reduced to BBB+ by S&P After Asset Transfer

Enbridge Inc.’s credit rating was cut one level by Standard & Poor’s, saying the financial position of Canada’s largest pipeline operator is weakening.

The lowering to BBB+ from A- comes after Enbridge transfered its Canadian liquids pipeline business and certain renewable energy assets into a subsidiary so that the company can increase its dividend.

“We view Enbridge’s financial risk profile as ‘aggressive,’” S&P said in a statement. “The continuing large capital program to expand existing and build new liquids pipelines will continue to pressure financial metrics for the next several years.”

Enbridge will continue to operate the pipeline assets. The company said the asset transfer, in the form of a C$30.4 billion ($24.8 billion) sale to its subsidiary Enbridge Income Fund Holdings Inc., will reduce its cost of capital and allow it to boost payments to shareholders.

S&P said the transaction didn’t contribute to its assessment of Enbridge’s financial risk, or reduce the claim bondholders would have on assets and cash flows enough to lower the ratings further.

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