Enbridge Sticks With Asset-Sale Plan as Leverage Weighs on Bonds

(Bloomberg) -- Enbridge Inc. said it’s sticking with an asset-sale program it outlined last year, denying a report that it had accelerated the plan and downplaying concern that the pipeline operator is carrying too much debt.

The comments came after Reuters reported on Thursday that Enbridge had increased its target for asset divestitures this year to C$8 billion ($6.4 billion), more than twice the C$3 billion goal it announced in November. Enbridge Chief Executive Officer Al Monaco said on the company’s fourth-quarter earnings conference call Friday that investors should “use that information with caution” and “treat it as suspect.”

“There’s certainly nothing that indicates to us that additional asset sales would be required,” Monaco said.

Enbridge Sticks With Asset-Sale Plan as Leverage Weighs on Bonds

However, the Calgary-based company’s bonds have underperformed rivals’ offerings amid concerns that its strategic plan doesn’t improve its balance sheet quickly enough. Enbridge acquired Spectra Energy Corp. last year in a deal that included about $14.5 billion of debt. In December, Moody’s Investors Service downgraded Enbridge’s rating one level, to Baa2, the second-lowest investment-grade rating, saying the divestiture plan was “insufficient to improve the financial profile of the company in a timely manner.”

Enbridge’s hybrid securities due 2077, which it originally sold in September, were quoted at a spread of 357 basis points, according to Bloomberg’s proprietary pricing service BVAL. Same-maturity hybrids issued by TransCanada Corp. were quoted at a spread of 262 basis points.

Enbridge’s shares rose 0.7 percent to C$43.52 at 10:42 a.m. in Toronto after the company, North America’s largest pipeline operator, reported fourth-quarter results that topped analysts’ estimates. Adjusted earnings were 61 cents a share, beating analysts’ 56-cent average projection.

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