OREANDA-NEWS. S&P Global Ratings today placed its 'BBB' corporate credit rating on Houston, Texas-based Spectra Energy Corp. (Spectra) and financing arm Spectra Energy Capital LLC, as well as 'BBB-' issue rating on Spectra Energy Capital, on CreditWatch with positive implications.

At the same time, we placed the 'BBB' corporate credit, and 'BBB' senior unsecured issue ratings on operating subsidiary Spectra Energy Partners LP (SEP) on CreditWatch positive and affirmed the 'A-2' short-term ratings. We also placed the 'BBB' corporate credit and senior unsecured issue ratings on Texas Eastern Transmission L. P. on CreditWatch positive.

We also took various ratings actions on Spectra Energy Corp.'s operating subsidiaries Westcoast Energy Inc. and Union Gas Ltd. For more information, please refer to the separate research updates for each published today.

"The CreditWatch listing on Spectra and its operating subsidiaries reflect our expectation that we will raise the ratings in line with those of Enbridge Inc.," S&P Global Ratings analyst Michael Grande said. "Spectra will become a wholly owned subsidiary of Enbridge, and we expect Spectra's 2017 consolidated EBITDA of about US$3.2 billion will account for about 40% of the combined company's pro forma cash flow."

We also believe Spectra's assets are highly complementary to Enbridge's. Spectra's platform of natural gas pipelines fills some gaps for Enbridge, and Spectra's midstream operations and regulated utility business increase the pro forma company's scale and optionality for its customers, in our view. We also believe the combination will smooth out the somewhat lumpy capital spending program, with Spectra's organic growth programs providing EBITDA in the next 12 to 24 months, compared with many of Enbridge's liquids projects, which have in-service dates beyond 2018. We also think the merger will provide a stronger platform to fund a future project backlog of about C$48 billion.