Moody’s ups Columbia Pipeline

Moody’s Investors Service said it upgraded the senior unsecured rating of Columbia Pipeline Group, Inc. to A3 from Baa1. The outlook is stable.

“We expect Columbia Pipeline Group to report a robust FFO to debt ratio in excess of 60% for fiscal year 2019,” said Gavin MacFarlane, Moody’s vice president and senior credit officer, in a press release. “The upgrade is primarily based on these very strong financial metrics that support an A3 rating, as well as the close relationship with its parent, TransCanada Pipelines.”

Columbia’s financial strength continues to benefit from parent TransCanada Pipelines Ltd.’s financial policies that have funded its expansion program and debt maturities with equity injections. Moody’s said it expects cash flow to continue to grow following the completion of several large projects in 2019 and a pipeline modernization program that drives rate increases. At the same time, debt levels have declined over the past several years as the company paid down a $500 million debt maturity in 2018.

Columbia’s A3 rating reflects its strategically located natural gas pipelines that sit atop the Marcellus and Utica shale producing regions. These assets generate predictable cash flow that is underpinned by long-term contracts that have an average remaining life of about 8 years. About 40% of contracted capacity is with utilities which are typically investment grade counterparties, the agency said.

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