Enbridge Inc.#s US$1 Billion 5.5% Series 2017A Subordinated Notes Assigned #BBB-# Rating

Stocks and Financial Services Press Releases Friday July 14, 2017 09:21
TORONTO--14 Jul--S&P Global Ratings

TORONTO (S&P Global Ratings) July 13, 2017--S&P Global Ratings today said it assigned its 'BBB-' issue-level rating to Enbridge Inc.'s US$1 billion subordinated notes series 2017A due July 15, 2077. The company intends to use the proceeds from the 2017 issue for capital projects, reduction in existing indebtedness, and general corporate purposes.

We classify the 2017A notes as having intermediate equity content because of their subordination, permanence, and optional deferability features. Consequently, in our calculation of Enbridge's consolidated credit ratios, we   will treat 50% of the principal outstanding and accrued interest under the hybrids as equity rather than debt. We will also treat 50% of the related payments on these securities as equivalent to a common dividend. Both   treatments are in line with our hybrid capital criteria.

While the subordinated notes are due in 60 years, interest margins on the notes will increase by 25 basis points in 2027 (year 10) and 75 in 2047 (year 30). We consider the cumulative 100 basis points as a material step-up, which provides an incentive for the trust to redeem the instruments on the call date. Therefore, we consider 2047 as the effective maturity date.

In line with our criteria, we will no longer recognize the securities as having intermediate equity content after the first call date, because the remaining period until effective maturity would be less than 20 years.


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