Fitch: Enbridge's CDS at Widest Level Since 2009

Freefalling oil prices may have contributed to wider credit default swap (CDS) spreads on Enbridge Inc., according to Fitch Solutions in its latest CDS Case Study Snapshot.

Five-year CDS on the Canadian energy company have widened 53% over the past month to price levels not seen in over five years. Spreads on North American Oil & Gas companies on the whole have taken a hit due to falling oil prices (CDS 25% wider in the last month), though CDS movement on Enbridge has significantly outpaced the broader sector over the same time period.

'After pricing consistently in 'BBB' space, plunging oil prices and weak global economic growth have now driven the cost of credit protection on Enbridge's debt in line with 'BB-' levels,' said Diana Allmendinger. 'In addition to falling oil prices, Enbridge's recently announced restructuring plans may also be contributing to the wider spreads.'

Fitch Solutions case studies build on data from its CDS Pricing Service and proprietary quantitative models, including CDS Implied Ratings. These credit risk indicators are designed to provide real-time, market-based views of creditworthiness. As such, they can and often do reflect more short term market views on factors such as currencies, seasonal market effects and short-term technical influences. This is in contrast to Fitch Ratings' Issuer Default Ratings (IDRs), which are based on forward-looking fundamental credit analysis over an extended period of time.

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