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Rating Action:

Moody's upgrades Enbridge and two subsidiaries and assigns a positive outlook

25 Jan 2019

Toronto, January 25, 2019 -- Moody's Investors Service ("Moody's") has upgraded the ratings of Enbridge Inc. (ENB) and Enbridge Energy Partners, L.P. (EEP) including their senior unsecured ratings to Baa2 from Baa3, and revised the outlook to positive. We have also confirmed the rating of Enbridge Energy Limited Partnership (EELP, Baa2 senior unsecured) and revised the outlook to positive. This concludes the review that began on December 11 2018. At the same time we have upgraded Enbridge (U.S.) Inc.'s backed short-term rating for commercial paper to Prime-2 from Prime-3.

We have also affirmed the ratings of Spectra Energy Partners, LP (SEP, Baa2 senior unsecured), Express Pipeline Limited Partnership (Express, Baa1 senior secured) and Texas Eastern Transmission L.P. (Texas, Baa1 senior unsecured) and changed their outlooks to positive from stable.

For a full list of rating actions see the bottom of this press release.

RATINGS RATIONALE

"Enbridge has taken substantial steps to reduce structural subordination and complexity in its organizational and capital structure, leading to the upgrade," said VP-Senior Credit Officer, Gavin MacFarlane. "The positive outlook reflects the prospects for a sustained improvement in leverage metrics and the prospects for a further one notch upgrade."

The recently executed cross-guarantee of the senior unsecured notes issued by ENB, SEP and EEP is the latest step towards reducing structural subordination and complexity in the group and has led to ENB's upgrade. In the past few months the company has executed the roll-ups of all four of its sponsored vehicles in transactions valued at about CAD14 billion. ENB has also completed a debt exchange for the highly complex Enbridge Income Fund (unrated) and eliminated it as an issuing entity. With a successful consent solicitation at SEP and EEP that will replace their reporting requirements with those of ENB, we expect that in the near term the only outstanding debt obligations at these entities will be the notes cross-guaranteed with ENB. The percentage of holding company debt to proportionately consolidated debt should reach 55-60%, up from around one-third, and these transactions also increase the amount of unlevered (proportionately consolidated) EBITDA to about 30%.

ENB's credit profile also reflects the company's large size and scale and its diverse, low risk asset base offset by high, but improving leverage and its sizeable multi-year capital program with execution risk.

The Baa2 senior unsecured ratings of SEP and EEP reflect the strength of the cross-guarantee that exists among them and ENB that leads the senior unsecured notes at these entities to carry an identical rating going forward. We have upgraded the ratings of the other, non-guaranteed classes of debt at EEP reflecting the close relationship with parent ENB and its improving credit profile, although they are not being included under the cross-guarantee.

The ratings of Texas, Express, and EELP have been constrained by the weaker credit quality of their respective parents. With the positive outlook on parent company SEP, we have also assigned a positive outlook to subsidiaries Texas and Express. The rating affirmation of both Texas and Express reflects the favorable competitive position of both systems and their strong financial metrics. With the successful consent solicitation at EEP, Moody's believes that EELP's credit quality will ultimately be driven by a guarantee from parent ENB.

Rating Outlook

ENB's positive outlook reflects its predictable cash flow and our expectation that the company's leverage metrics will continue to improve.

Factors that could lead to an upgrade

We could upgrade the ratings if proportionately consolidated debt to EBITDA is sustained comfortably below 5.5x or there is a material improvement in the company's business risk profile.

Factors that could lead to a downgrade

We could downgrade the ratings if proportionately consolidated debt to EBITDA is sustained well above 6x. Increases in structural subordination, more aggressive financial policies or a material deterioration in the company's business risk could also lead to a downgrade.

Upgrades:

..Issuer: Enbridge (U.S.) Inc.

....Senior Unsecured Commercial Paper, Upgraded to P-2 from P-3

..Issuer: Enbridge Energy Partners, L.P.

.... Issuer Rating, Upgraded to Baa2 from Baa3

....Junior Subordinated Regular Bond/Debenture, Upgraded to Baa3 from Ba1

....Senior Unsecured Commercial Paper, Upgraded to P-2 from P-3

....Senior Unsecured Regular Bond/Debenture, Upgraded to Baa2 from Baa3

..Issuer: Enbridge Inc.

.... Issuer Rating, Upgraded to Baa2 from Baa3

....Pref. Seniority Shelf, Upgraded to (P)Ba1 from (P)Ba2

....Senior Unsecured Shelf, Upgraded to (P)Baa2 from (P)Baa3

....Preference Shelf, Upgraded to (P)Ba1 from (P)Ba2

....Subordinate Shelf, Upgraded to (P)Baa3 from (P)Ba1

....Preferred Stock, Upgraded to Ba1 from Ba2

....Preferred Stock, Upgraded to (P)Ba1 from (P)Ba2

....Subordinate Regular Bond/Debenture, Upgraded to Ba1 from Ba2

....Senior Unsecured Medium-Term Note Program, Upgraded to (P)Baa2 from (P)Baa3

....Senior Unsecured Regular Bond/Debenture, Upgraded to Baa2 from Baa3

Outlook Actions:

..Issuer: Enbridge (U.S.) Inc.

....Outlook, None

..Issuer: Enbridge Energy Limited Partnership

....Outlook, Changed To Positive From Rating Under Review

..Issuer: Enbridge Energy Partners, L.P.

....Outlook, Changed To Positive From Rating Under Review

..Issuer: Enbridge Inc.

....Outlook, Changed To Positive From Rating Under Review

..Issuer: Express Pipeline Limited Partnership

....Outlook, Changed To Positive From Stable

..Issuer: Spectra Energy Partners, LP

....Outlook, Changed To Positive From Stable

..Issuer: Texas Eastern Transmission L.P.

....Outlook, Changed To Positive From Stable

Confirmations:

..Issuer: Enbridge Energy Limited Partnership

....Subordinate Shelf, Confirmed at (P)Baa3

....Senior Unsecured Shelf, Confirmed at (P)Baa2

....Senior Unsecured Regular Bond/Debenture, Confirmed at Baa2

Affirmations:

..Issuer: Express Pipeline Limited Partnership

....Senior Secured Regular Bond/Debenture, Affirmed Baa1

..Issuer: Spectra Energy Partners, LP

....Senior Unsecured Commercial Paper, Affirmed P-2

....Senior Unsecured Regular Bond/Debenture, Affirmed Baa2

..Issuer: Texas Eastern Transmission L.P.

....Senior Unsecured Regular Bond/Debenture, Affirmed Baa1

The principal methodology used in rating Enbridge (U.S.) Inc., Enbridge Energy Limited Partnership, Enbridge Energy Partners, L.P., Enbridge Inc., Express Pipeline Limited Partnership, and Spectra Energy Partners, LP was Midstream Energy, published in December 2018. The principal methodology used in rating Texas Eastern Transmission L.P. was Natural Gas Pipelines, published in July 2018. Please see the Rating Methodologies page on www.moodys.com for a copy of these methodologies.

ENB is a North American energy delivery company. The company has more than 17,000 miles of liquids pipelines and about 200,000 miles of natural gas and natural gas liquids pipelines.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Gavin MacFarlane
VP - Senior Credit Officer
Infrastructure Finance Group
Moody's Canada Inc.
70 York Street
Suite 1400
Toronto, ON M5J 1S9
Canada
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Jim Hempstead
MD - Utilities
Infrastructure Finance Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Releasing Office:
Moody's Canada Inc.
70 York Street
Suite 1400
Toronto, ON M5J 1S9
Canada
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

No Related Data.
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