Moody’s Investors Service confirmed TransCanada PipeLines’ (TCPL) A2 senior unsecured credit ratings and stable outlook on Friday following the Canadian pipeline giant’s announcement a week earlier that its parent company has signed an agreement to buy Gas Transmission Northwest Corp. (B2 senior unsecured, under review for possible upgrade) from bankrupt National Energy & Gas Transmission Inc. for US$1.7 billion, including $500 million in assumed debt.

While details of TCPL’s plans to fund the US$1.2 billion cash portion of the acquisition are not yet finalized, the company stated that it will structure the financing in a manner consistent with its current financial position and credit ratings. Completion of the proposed transaction is contingent upon receipt of approval from the bankruptcy court, which will include a competitive auction process, as well as the customary anti-trust reviews and approvals. GTN was not part of its parent company’s bankruptcy filing.

“It is possible that changes to TCPL’s bid or its financing strategy could cause us to re-evaluate the impact of the proposed acquisition on TCPL’s ratings,” Moody’s said.

GTN owns two pipeline systems, the Gas Transmission Northwest system and the North Baja Pipeline system. Gas Transmission Northwest is a 3 Bcf/d gas pipeline that extends through the states of Washington and Oregon connecting TCPL’s BC System with PG&E’s system in California. The FERC regulated pipeline is 95% contracted with an average contract life in excess of 10 years. The North Baja system is an 80 mile pipeline located in Southern California with capacity of 0.5 Bcf/d. It is highly contracted for terms approaching 19 years, Moody’s said.

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