S&P cuts Spectra outlook to negative

Standard & Poor's said it revised its outlook on Spectra Energy Corp. to negative from stable.

At the same time, the agency said it affirmed Spectra's BBB+ long-term corporate credit rating.

The outlook revision reflects its expectation that the low level of commodity prices will lead to a significant decline in Spectra's cash flows and key credit metrics in 2009, S&P noted.

Although about three-quarters of the company's cash flows come from relatively stable assets with fixed fees, lower processing and fractionation margins are impacting the company's commodity price sensitive businesses, specifically those at DCP Midstream LLC (BBB/stable/A-2), S&P added.

As a whole, the agency said it expects Spectra Energy's Field Services unit to produce about $550 million of EBITDA in 2009 versus $986 million in 2008 after a $128 million reduction in the fourth-quarter 2008 year-over-year comparison.

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