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'.

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.

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.

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.

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.

Date modified:

2021-02-19