DBRS Comments on TransCanada’s Decision to Cancel Energy East

DBRS Limited (DBRS) notes that TransCanada Corporation (TCC or the Company) has announced that it would no longer be proceeding with its proposed Energy East Pipeline and Eastern Mainline Projects. TCC has also stated that in light of the projects’ inability to reach a regulatory decision, no recoveries from third parties were expected for the approximately $1.3 billion of costs (including capitalized interest) incurred on the projects to date. Consequently, TCC expects to take an estimated $1 billion after-tax non-cash charge in the company's fourth quarter results.

DBRS views that today’s announcement is credit neutral for TCC, as the after-tax non-cash charge is not expected to have a material impact on the Company’s credit metrics. Today’s announcement does not affect the Company’s business risk profile, as the current ratings reflect environmental, regulatory and political risks with respect to several of TCC’s long-term capital projects.

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

The principal methodologies are Rating Companies in the Pipeline and Diversified Energy Industry, DBRS Criteria: Commercial Paper Liquidity Support for Non-Bank Issuers and DBRS Criteria: Preferred Share and Hybrid Criteria for Corporate Issuers, which can be found on dbrs.com under Methodologies.

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