DBRS Confirms Enbridge Energy Partners, L.P. at BBB, BB (high) and R-2 (middle), Stable Trends

DBRS has today confirmed the Issuer Rating at BBB and the ratings on the Senior Unsecured Notes, Junior Subordinated Notes and Commercial Paper of Enbridge Energy Partners, L.P. (EEP or the Partnership) at BBB, BB (high) and R-2 (middle), respectively, all with Stable trends. The ratings incorporate DBRS’s expectation that EEP’s credit ratios, which are under pressure due to its large growth capex program, will recover and surpass recent levels, while also recognizing expected continued improvement in its business risk profile following completion of its major liquids pipeline projects in 2013 and 2014. DBRS expects EEP to maintain sufficient liquidity to fully support its needs in the event of difficult capital markets conditions. Finally, EEP’s ratings are also supported by the strong sponsorship of Enbridge Inc. (ENB, rated A (low)).

DBRS expects EEP’s credit metrics to be pressured as a result of its large growth capex program and high distribution payout. As a Master Limited Partnership, EEP pays out most of its cash flow to unitholders, with growth capex and acquisitions requiring external funding (debt and/or units). DBRS expects EEP’s adjusted debt-to-capital ratio to remain in the low-50% range and its cash flow-to-debt and interest coverage metrics to weaken moderately in the near term prior to surpassing recent levels in the medium term.

EEP’s business risk profile is expected to continue improving following completion of its major low-risk (due to strong regulatory and contractual arrangements) liquids pipeline projects in 2013 and 2014. As a result, EEP’s exposure to its higher risk (due to volume and commodity price risks) Natural Gas segment, is expected to continue to decline proportionally. DBRS estimates that the Liquids, Natural Gas and Marketing segments accounted for 71%, 28% and 1%, respectively, of EEP’s segment EBITDA in LTM June 30, 2012, and expects Liquids to account for two-thirds to three-quarters of segment EBITDA in the medium term.

Finally, EEP’s ratings are also supported by the strong sponsorship of ENB, which, through its wholly owned subsidiary, Enbridge Energy Company, Inc. (EEP’s general partner), concluded a joint funding agreement under which ENB effectively funded two-thirds of the $1.2 billion cost of the Alberta Clipper U.S. crude oil pipeline project, with the remaining one-third funded by EEP in July 2009. A similar structure has been put into place to fund the $2.2 billion Eastern Access growth projects (40% EEP and 60% ENB).

Notes:
All figures are in U.S. dollars unless otherwise noted.

The applicable methodology is Rating North American Pipeline and Diversified Energy Companies, which can be found on our website under Methodologies.