DBRS cuts Inter Pipeline, debt to A (low)

DBRS said it downgraded the issuer rating and senior unsecured debentures rating of Inter Pipeline (Corridor) Inc. to A (low) from A.

The downgrades remove the ratings from under review with negative implications, where they were placed on March 14.

Concurrently, the agency confirmed Inter Pipeline’s commercial paper rating at R-1 (low), as the rating is consistent with the DBRS rating scales for long-term ratings of A (low).

All trends are stable.

DBRS said the actions follow Canadian Natural Resources Ltd.’s (BBB (high) acquisition of a 60% interest in the Athabasca Oil Sands Project and the Scotford upgrader, through its affiliate Canadian Natural Upgrading Ltd., from Shell Canada Energy on May 31.

Separately, Canadian Natural Resources and Shell jointly acquired Marathon Oil Corp.’s 20% share in Athabasca Oil and related oil sands investments.

DBRS said it views that the replacement of Shell, which is considered to be a strong credit quality shipper, by the relatively weaker rated Canadian Natural Resources for a majority of the capacity (70%) contracted under the Inter Pipeline firm service agreement (FSA) has increased the overall counterparty risk of the shipping group.

The agency noted that, although the higher counterparty risk is marginally offset by the replacement of Marathon, a weaker counterparty, by Canadian Natural Resources and Shell, which are both investment-grade shippers, a one-notch downgrade is appropriate at this time.

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