S&P lowers Enmax view to negative

S&P said it affirmed the ratings on Enmax Corp., including its BBB+ issuer credit rating.

The agency also said it revised the outlook to negative from stable.

Enmax recently announced that it will acquire Emera Inc.'s subsidiary Emera Maine, a regulated electric transmission and distribution utility in Maine, for about C$1.8 billion, and assume about $350 million of its debt.

The company is likely to finance most of the purchase price with debt. The transaction is expected to close by year-end 2019.

The negative outlook reflects a belief that the heavily debt-financed transaction will likely weaken financial measures, S&P explained.

In 2020, the agency said it anticipates adjusted funds from operations-to-debt in the 12% to 13% range and adjusted debt-to-EBITDA in the 5.3x to 5.6x range.

S&P also said that having operations in the United States, particularly the East Coast, will expose Enmax to foreign currency-related risks and greater operational risks.

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