Moody’s lowers Enbridge view to negative

Moody’s Investors Service said it affirmed the Baa2 senior unsecured ratings for Enbridge Inc. and its subsidiaries, Enbridge Income Fund and Enbridge Energy LP.

Moody’s also said it affirmed the Baa3 senior unsecured rating for Enbridge Energy Partners LP and the prime-2 short-term commercial-paper rating for Enbridge (U.S.) Inc.

The agency also said it changed the outlooks on the companies to negative from stable.

The negative outlook reflects the likelihood of ongoing high leverage and elevated execution risks associated with the company’s capital program, Moody’s said.

While Moody’s said it expects key financial metrics to improve over the next few years, it is unlikely Enbridge will reach the financial metric thresholds necessary to maintain its current rating without additional corporate actions.

The negative outlook reflects the company’s heightened execution risk associated with its capital expenditure plans, the agency said, and a consolidated ratio of debt-to-EBITDA of about 7x for the latest 12 months that ended March 31.

Moody’s said it sees this ratio as too high for Enbridge’s Baa2 rating.

The ratings also consider the company’s large size and scale, as well as its low risk asset base offset by high leverage, structural subordination and a complex organizational and capital structure.

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