"The environment remains favorable for Canadian utility consolidation in the United States," Moody’s senior credit officer Gavin MacFarlane stated. "The availability of low-cost financing motivates buyers and boosts valuations for sellers."
MacFarlane said Moody’s anticipates more merger and acquisition activity in both the mainstream and utility sectors, although uncertainty over changes in the US tax code or regulatory scrutiny could pause such activity.
Moody’s noted that Enbridge Inc.’s acquisition of Spectra Energy Partners helped diversify the company’s business risk, while the acquisition of the Columbia Pipeline Group by TransCanada Corporation gave it access to rapidly-growing shale gas formations.
Other factors that could spur the continued acquisition activity include synergies, low-cost financing, limited opportunities in Canada and higher regulated returns in the United States.
