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How’s Enbridge Managing Its Leverage?

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Apr. 8 2019, Published 8:06 a.m. ET

Enbridge’s leverage

Enbridge’s (ENB) debt-to-EBITDA ratio for 2018 was 4.7x. The company is targeting a debt-to-EBITDA ratio between 4.5x to 5x for 2019. Enbridge has been taking significant steps to strengthen its balance sheet. The company announced 7.8 billion Canadian dollars of non-core asset sales in 2018. Enbridge closed 5.7 billion Canadian dollars of asset sales in 2018. The company used the proceeds from the asset sales to repay debt.

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Credit ratings

The above graph shows Enbridge’s debt-to-EBITDA ratio for three years. Enbridge has a senior unsecured debt rating of BBB+ with a stable outlook from Standard & Poors. The company has a Baa2 rating from Moody’s with a positive outlook and a BBB+ rating from Fitch.

In the fourth quarter of 2018, Enbridge completed the acquisitions of all the outstanding units of Enbridge Income Fund Holdings, Enbridge Energy Partners, Enbridge Energy Management, and Spectra Energy Partners. Completing the acquisitions simplifies Enbridge’s structure and improves its credit profile.

Suspending DRIP

In December, Enbridge suspended its DRIP (Dividend Reinvestment Program) with an objective of moving towards self-funding its capital program. The company doesn’t intend to raise equity to fund its growth projects. Enbridge forms ~8.9% of the Global X MLP & Energy Infrastructure ETF (MLPX).

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