Canada’s Pipeline Transportation System 2016

Appendix: Company Credit Summaries

This chart provides a comparison of the rating scales used by DBRS, S&P, and Moody's when rating long-term debt. Because of differences between these agencies’ rating approaches and definitions, some subjectivity is required in comparing their rating scales. Each agency also provides a rating outlook or trend, which assesses the potential direction of a credit rating. Common outlooks or trends are: 'Positive'; 'Negative'; and 'Stable'.

Debt Rating Comparison Chart
Credit Quality DBRS S&P Moody's
Investment Grade
Superior/High grade AAA AAA Aaa
AA (high) AA+ Aa1
AA AA Aa2
AA (low) AA- Aa3
Good/Upper Medium A (high) A+ A1
A A A2
A (low) A- A3
Adequate/Medium BBB (high) BBB+ Baa1
BBB BBB Baa2
BBB (low) BBB- Baa3
Non-Investment Grade
Speculative BB (high) BB+ Ba1
BB BB Ba2
BB (low) BB- Ba3
Highly speculative B (high) B+ B1
B B B2
B (low) B- B3
Very highly speculative CCC CCC Caa1
CC CC Caa2
C C Caa3
D D Ca

Note: DBRS and S&P ratings in the CCC category also have subcategories "high/+"and "low/-" and the absence of "high/+" and "low/-" designation indicates the rating is in the "middle" of the category. DBRS also does so for CC and C categories.

DBRS Credit Rating History
Pipeline 2010 2011 2012 2013 2014 2015
Alliance L.P. A(low) A (low) /Stable A (low) /Stable A(low)/stable A(low)/stable BBB
Enbridge Pipelines A (high) A /Stable A /Stable A /Stable A /Stable A /Stable
Express A (low) A (low) A (low) A (low) A (low) A (low)
M&NP L.P. A A /Stable A /Stable A /Stable A /Stable A /Stable
NGTL A A /Stable A /Stable A (low) A (low) A (low)
TQM A (low) A (low) /Stable A (low) /Stable A (low) /Stable A (low) /Stable A (low)/Stable
TransCanada A A /Stable A /Stable A (low) A (low) A (low)
Trans-Northern A(low) A (low) /Stable A (low) /Stable A (low) /Stable A (low) /Stable A (low) /Stable
Westcoast A (low) A (low) /Stable A (low) /Stable A (low) /Stable A (low) /Stable A (low) /Stable

While these are representative credit ratings for the listed companies, the type of debt issuances that are directly assessed vary.

In assigning a credit rating to a particular company, DBRS states that it attempts to consider all meaningful factors that could impact the risk of maintaining timely payments of interest and principal in the future. While key credit considerations will vary from industry to industry, some of the common factors considered for most ratings are core profitability, asset quality, strategy and management strength, and the financial and business risk profile.

The following specific factors are also considered for pipelines when deriving their credit ratings: regulatory factors, competitive environment, supply and demand considerations, and regulated versus non-regulated activities.

S&P Credit Rating History
Pipeline 2010 2011 2012 2013 2014 2015
Enbridge Pipelines A- /Stable A- /Stable A-/Stable A-/Negative A-/Watch Neg. BBB+
NGTL A- /Stable A- /Stable A- /Stable A- /Stable A- /Stable A- /Stable
TransCanada Pipelines A- /Stable A- /Stable A- /Stable A- /Stable A- /Stable A- /Stable
Westcoast A- /Stable BBB+ /Stable BBB+ /Stable BBB/Stable BBB/Stable BBB/Stable

While these are representative credit ratings for the listed companies, the type of debt issuances that are directly assessed vary.

S&P indicates that its credit rating reflects a borrower's capacity and willingness to meet its financial commitments on a timely basis. S&P bases its ratings on the overall creditworthiness of a consolidated company. Therefore, the rating of a wholly-owned subsidiary, in the absence of meaningful ring-fencing measures, generally reflects the creditworthiness of the parent.

Moody's Credit Rating History
Pipeline 2010 2011 2012 2013 2014 2015
Alliance L.P. A3 /Stable A3 /Stable A3 /Stable A3 /Stable Baa1/Watch Baa2/Stable
Enbridge Inc. Baa1 Baa1 Baa1 Baa1 Baa1/Negative Baa2/Stable
Express Baa1/negative Baa1/negative Baa1/Stable Baa1/Stable Baa1/Stable Baa1/Stable
M&NP A2 /Stable A2 /Stable A2 /Stable A2 /Stable A2 /Stable A2 /Stable
NGTL A3 /Stable A3 /Stable A3 /Stable A3 /Stable A3 /Stable A3 /Stable
TransCanada A3 /Stable A3 /Stable A3 /Stable A3 /Stable A3 /Stable A3 /Stable

While these are representative credit ratings for the listed companies, the type of debt issuances that are directly assessed vary.

Moody's indicates that its credit analysis focuses on the fundamental factors and key business drivers relevant to an issuer's long-term and short-term risk profile. The foundation of Moody's methodology rests on two basic considerations:

  • the risk to the debt holder of not receiving timely payment of principal and interest on the specific debt security; and
  • a comparison of the level of risk with that of all other debt securities.

Like S&P, Moody's focuses its ratings on the overall creditworthiness of the consolidated entity. In doing so Moody's measures the ability of an issuer to generate cash in the future, thus its primary focus is on the predictability of future cash generation. This determination is built on an analysis of the individual issuer and of its strengths and weaknesses compared to those of its peers worldwide. An examination of factors external to the issuer is also conducted, including industry or country-level trends that could impact the entity's ability to meet its debt obligations. Of particular concern is the ability of management to sustain cash generation in the face of adverse changes in the business environment.

Photos: left: A pump jack silhouetted against the setting sun; centre: The grey valves and wheels of a pump station on clear day; right: Folded hands hold a pen on a board room table in a large meeting room.
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