Maritimes & Northeast Pipeline L.P. Rating Raised To 'AA-' On Lower Debt Service As Maturity Nears; Outlook Stable

  • Maritimes & Northeast Pipeline L.P. (Maritimes-Canada) is a 352-mile, 30-inch diameter underground natural pipeline that represents the Canadian portion of the Maritimes & Northeast Pipeline System.
  • We project higher debt service coverage (DSC) driven by lower total debt service expense in the final two payment periods as the fully amortizing senior debt nears maturity.
  • We expect all senior debt will be paid off by November 2019.
  • As a result, we raised our rating on all Maritimes-Canada's senior debt by one notch to 'AA-' from 'A+'. The outlook is stable.
  • The stable outlook reflects our view that Maritimes-Canada's cash flows and operational performance will remain steady with exceptional liquidity through debt maturity in late 2019.
NEW YORK (S&P Global Ratings) March 22, 2019—S&P Global Ratings today took the 
rating actions listed above. Our upgrade is based on a higher projected debt 
service coverage as both tranches of senior notes are in their final year of 
the tenor. The rating action is also supported by Maritimes-Canada's favorable 
financial performance in 2018 with cash flows available for debt service that 
exceeded our expectations.

The stable outlook reflects our view that Maritimes-Canada's cash flows and 
operational performance will remain steady through debt maturity in late 2019 
with an anticipated debt service coverage of about 2.2x and sufficient 
liquidity cushion to cover shortfalls in a downside scenario. 

A downgrade is unlikely because our expectation of Maritimes-Canada's 
operating cash flow and funds in the debt service reserves and escrow account 
are well in excess of the final debt service payments. However, we would 
consider a lower rating if the pipeline experiences prolonged downtime due to 
operational challenges such that no payments would be received from the 
existing contracts.

An upgrade is unlikely at this time given the short remaining tenor of the 
senior debt that will be fully paid off by November 2019.
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