OREANDA-NEWS. Fitch Ratings has assigned a 'BBB' rating to Spectra Energy Partners, LP (SEP) offering of senior unsecured notes. Proceeds from the notes will be used to repay all or a portion of outstanding commercial paper, to fund capital expenditures and for general partnership purposes. Fitch currently rates SEP's Issuer Default Rating (IDR) 'BBB'. The Rating Outlook is Stable.

KEY RATINGS DRIVERS

Stable, Predictable Cash Flows: SEP's ratings reflect the earnings and cash flow stability driven by SEP's high percentage of fee-based and capacity reservation revenue derived from the company's operations.

Large-Scale Capex Program: The ratings consider that SEP is pursuing a large-scale capital expenditure program and that credit metrics could exhibit some weakness on an interim basis as large-scale projects are constructed. Fitch believes that the inherent risks of the capital program, however, are partially mitigated by the focus on pipeline projects, which are generally backed by firm capacity commitments under long-term contracts.

Capex Weighs on Metrics: Fitch believes SEP's new core assets will provide the stability needed to maintain credit quality, and the incremental EBITDA provided as growth projects come online will result in improved metrics, more in line with peers. Fitch expects debt-to-adjusted EBITDA for SEP to be between 4x to 4.5x for 2015, assuming balanced debt and equity funding of the expected growth projects. Should leverage be expected to remain above 4.5x on a sustained basis Fitch would likely take a negative rating action. Fitch typically adjusts EBITDA to remove earnings in unconsolidated investments but include distributions from them.

Adequate Liquidity Position and Financial Flexibility: SEP liquidity and financial flexibility remains adequate. As of Dec. 31, 2014, SEP had roughly \$1.1 billion in availability under its \$2 billion revolving credit facility. Maturities are manageable. SEP's credit facility contains a covenant that requires SEP to maintain a ratio of total debt-to-adjusted EBITDA, as defined in the credit agreement, of 5x or less. This ratio was 3.7x as of Dec. 31, 2014.

KEY ASSUMPTIONS

Fitch's key assumptions within the rating case for the issuer include:

--WTI oil price that trends up from \$50/barrel in 2015 to \$60/barrel in 2016 and a long-term price of \$75/barrel; and Henry Hub gas that trends up from \$3/mcf in 2015 to \$3.25/mcf in 2016 and a long-term price of \$4.50/mcf consistent with Fitch's published Base Case commodity price deck.
--Moderate revenue growth on existing assets.
--Balanced funding of growth capital spending and acquisitions.

RATINGS SENSITIVITIES:

Negative: Future developments that may, individually or collectively, lead to a negative rating action include:

--Sustained worsening of credit ratios due to increased leverage or poor operating performance. Distribution coverage at SEP below 1x and sustained leverage above 4.5x would likely lead to a negative rating action.
--Significant speculative building or large-scale leveraging third-party acquisitions,
--Any change in management's stated plan to fund growth with balance of debt and equity with a bias towards more debt funding.

Positive: Future developments that may, individually or collectively, lead to positive rating action include:

--Improvement of leverage metrics. A SEP sustained leverage between 3 and 3.5x would likely lead to a one-notch upgrade.