Morningstar DBRS Finalizes Provisional Credit Rating of BB With a Negative Trend on Inter Pipeline Ltd.'s Fixed-to-Fixed Rate Subordinated Notes

DBRS Limited (Morningstar DBRS) finalized its provisional credit rating of BB with a Negative trend to Inter Pipeline Ltd.'s (IPL or the Company) 6.75% Fixed-to-Fixed Rate Subordinated Notes, Series 2024-A due December 12, 2054 (the Hybrid Notes) of $450 million. Morningstar DBRS also assigns an equity weight of 50% to the Hybrid Notes based on the current Morningstar DBRS Global Corporate Criteria released on April 15, 2024.

Morningstar DBRS notes that the Hybrid Notes are direct unsecured subordinated obligations of IPL and subordinated in right of payment to the prior payment in full of all present and future senior indebtedness. The Hybrid Notes will be effectively subordinated to all indebtedness and obligations of the Company's subsidiaries. IPL proposes to use the net proceeds from the sale of the Hybrid Notes to repay indebtedness and for general corporate purposes.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factors that had a significant or relevant effect on the credit analysis.

A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (August 13, 2024) https://dbrs.morningstar.com/research/437781.

BUSINESS RISK ASSESSMENT (BRA) AND FINANCIAL RISK ASSESSMENT (FRA)

(A) Weighting of BRA Factors
In the analysis of IPL, the BRA factors listed in the Pipeline and Midstream Energy Industry are considered in the order of importance contemplated in the methodology.

In the analysis of IPL, the BRA factors listed in the Oil & Gas Industry are considered in the order of importance contemplated in the methodology.

(B) Weighting of FRA Factors
In the analysis of IPL, the FRA factors listed in the Pipeline and Midstream Energy Industry are considered in the order of importance contemplated in the methodology.

In the analysis of IPL, the FRA factors listed in the Oil & Gas Industry are considered in the order of importance contemplated in the methodology.

(C) Weighting of the BRA and the FRA
In the analysis of IPL, the BRA listed in the Pipeline and Midstream Energy Industry carries greater weight than the FRA.

In the analysis of IPL, the BRA and the FRAs listed in the Oil & Gas Industry carry approximately equal weight.

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

Morningstar DBRS applied the following principal methodology:

Global Methodology for Rating Companies in the Oil and Gas, Oilfield Services, Pipeline, and Midstream Energy Industries (August 12, 2024) https://dbrs.morningstar.com/research/437739.

Morningstar DBRS credit ratings may use one or more sections of the Morningstar DBRS Global Corporate Criteria (April 15, 2024; https://dbrs.morningstar.com/research/431186), which covers, for example, topics such as holding companies and parent/subsidiary relationships, guarantees, recovery, and common adjustments to financial ratios.

The following methodologies have also been applied:

Morningstar DBRS Global Corporate Criteria (April 15, 2024)
https://dbrs.morningstar.com/research/431186

Morningstar DBRS Criteria: Approach to ESG Factors in Credit Ratings (August 13, 2024)
https://dbrs.morningstar.com/research/437781

The credit rating methodologies used in the analysis of this transaction can be found at: https://dbrs.morningstar.com/about/methodologies.

A description of how Morningstar DBRS analyzes corporate finance transactions and how the methodologies are collectively applied can be found at: https://dbrs.morningstar.com/research/431153.

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 under Related Documents or by contacting us at info-DBRS@morningstar.com.

The credit rating was initiated at the request of the rated entity.

The rated entity or its related entities did participate in the credit rating process for this credit rating action.

Morningstar DBRS had access to the accounts, management and other relevant internal documents of the rated entity or its related entities in connection with this credit rating action.

This is a solicited credit rating.

The conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. Morningstar DBRS trends and credit ratings are under regular surveillance.

Information regarding Morningstar DBRS credit ratings, including definitions, policies, and methodologies, is available on dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.

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