DBRS Places Spectra Energy Capital, LLC and Rated Subsidiaries Under Review with Developing Implications

DBRS Limited (DBRS) has today placed the ratings of Spectra Energy Capital, LLC (Spectra Capital, or the Company) and the ratings of the Company’s DBRS-rated subsidiaries Under Review with Developing Implications. The entities covered under this rating action are:

-- Spectra Energy Capital LLC, Issuer Rating of BBB
-- Spectra Energy Capital LLC, Unsecured Debentures rated BBB
-- Spectra Energy Capital LLC, Commercial Paper rated R-2 (middle)
-- Westcoast Energy Inc., Issuer Rating of A (low)
-- Westcoast Energy Inc., Unsecured Debentures rated A (low)
-- Westcoast Energy Inc., Commercial Paper rated R-1 (low)
-- Westcoast Energy Inc., First Preferred Shares - cumulative, redeemable rated Pfd-2 (low)
-- Union Gas Limited, Issuer Rating of “A”
-- Union Gas Limited, Unsecured Debentures/Medium-Term Note Debentures rated “A”
-- Union Gas Limited, Commercial Paper rated R-1 (low)
-- Union Gas Limited, Cumulative Redeemable Preferred Shares rated Pfd-2
-- Maritimes & Northeast Pipeline Limited Partnership, Issuer Rating of “A”
-- Maritimes & Northeast Pipeline Limited Partnership, 4.34% Senior Secured Notes due 2019 rated “A”
-- Maritimes & Northeast Pipeline Limited Partnership, 6.90% Senior Secured Notes due 2019 rated “A”
-- Express Pipeline Limited Partnership & Express Pipeline LLC, Issuer Rating of A (low)
-- Express Pipeline Limited Partnership & Express Pipeline LLC, Senior Secured Notes due 2020 rated A (low)
-- Express Pipeline Limited Partnership & Express Pipeline LLC, Subordinated Secured Notes due 2019, rated BBB

The rating action follows the Company’s announcement that they have entered into a definitive merger agreement under which Enbridge Inc. and Spectra Energy will combine in a stock-for-stock merger transaction (the Transaction), which values Spectra Energy common stock at approximately $37 billion (USD 28 billion), based on the closing price of Enbridge's common shares on September 2, 2016. The combination will create the largest energy infrastructure company in North America and one of the largest globally, based on a pro forma enterprise value of approximately $165 billion (USD 127 billion). The Transaction was unanimously approved by the boards of directors of both companies and is expected to close in the first quarter of 2017, subject to shareholder and certain regulatory approvals, and other customary conditions.

DBRS will further review the potential impacts of the Transaction on Spectra Capital’s ratings and the ratings of Company’s DBRS-rated subsidiaries, with an aim to resolve the Under Review – Developing Implications status.

Notes:
All figures are in Canadian dollars unless otherwise noted.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link to the right under Related Research or by contacting us at info@dbrs.com.

The applicable methodologies are Ratings Companies in the Pipeline and Diversified Energy Industry (December 2015), Rating Companies in the Regulated Electric, Natural Gas and Water Utilities Industry (October 2015), DBRS Criteria: Commercial Paper Liquidity Support for Non-Bank Financial Issuers (April 2016), Preferred Share and Hybrid Criteria for Corporate Issuers (January 2016) and Rating Holding Companies and Their Subsidiaries (January 2016), which can be found on our website under methodologies.

The ratings of Spectra Energy Capital, LLC were not initiated at the request of the rated entity.

For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.