Mr. Michael Rao of DBRS reports

Debt rated:  Commercial paper

Rating:  R-2 (high)

Trend:  Stable

Rating action:  Downgraded

Debt rated:  Issuer rating

Rating:  BBB (high)

Trend:  Stable

Rating action:  Downgraded

Debt rated:  Medium-term notes and unsecured debentures

Rating:  BBB (high)

Trend:  Stable

Rating action:  Downgraded

Debt rated:  Cumulative redeemable preferred shares

Rating:  Pfd-3 (high)

Trend:  Stable

Rating action:  Downgraded

DBRS Ltd. has downgraded Enbridge Inc.'s (ENB) issuer rating and medium-term notes and unsecured debentures rating to BBB (high) from A (low), commercial paper rating to R-2 (high) from R-1 (low), and cumulative redeemable preferred shares rating to Pfd-3 (high) from Pfd-2 (low). The trends are all stable. ENB's ratings were placed under review with developing implications on Dec. 3, 2014, and changed to under review with negative implications on June 19, 2015 (please see DBRS press releases for details). The current action removes the ratings from under review with negative implications.

The ENB ratings downgrade is consistent with DBRS's expectations as noted in the June 19, 2015, press release and follows today's approval by the public shareholders of Enbridge Income Fund Holdings Inc. (EIFH) of the transaction described below. For the rationale for the downgrade of ENB's ratings, please see "impact on ENB -- update," below.

Background

The Dec. 3, 2014, placement of ENB's ratings under review with developing implications by DBRS followed the announcement that ENB planned to transfer its Canadian liquids pipelines business, consisting of Enbridge Pipelines Inc. (EPI) and Enbridge Pipelines (Athabasca) Inc. (EPA) as well as certain renewable power generation assets (held within EPI) to its Canadian affiliate, Enbridge Income Fund (EIF) (the transaction). Secondly, ENB also announced plans to increase its common share dividend by 33 per cent and its common share dividend policy to a range of 75 per cent to 85 per cent of adjusted earnings from the previous range of 60 per cent to 70 per cent. Finally, ENB announced that it was considering the potential for public debtholders of ENB to exchange up to approximately $4-billion of ENB debt for new notes of EIF.

In addition to the transaction, during fourth quarter 2014, ENB and EPI began formalizing a plan to transfer EPI's ownership interest in Enbridge Energy Company Inc. (EECI) to ENB (the EECI transfer). EECI directly holds U.S. assets, which include certain liquids pipeline assets, Enbridge Energy Partners LP and certain renewable energy projects.

The June 19, 2015, change in the under review status of ENB's ratings to negative by DBRS followed the announcement that ENB and EIF had reached an agreement to proceed with the transaction. ENB decided not to proceed with a debt exchange with EIF. The EECI transfer was completed on Aug. 10, 2015. The transaction is subject to customary regulatory approvals and closing conditions. The public shareholders of EIFH approved the transaction on Aug. 20, 2015, with closing expected to follow shortly.

Impact on ENB -- update

Following its review of the EIFH management information circular (MIC), DBRS continues to believe that the combination of the transaction and the EECI transfer have negatively impacted ENB's credit risk profile. Please see the June 19, 2015, DBRS press release for the main factors leading to that conclusion.

Prior to closing, EPA will issue a senior unsecured promissory note to ENB with a principal amount of approximately $4.1-billion (the mirror note), representing a portion of the required capitalization of EPA. Payments of principal and interest by EPA thereunder have been structured to mirror the payments of certain principal and interest required under certain Canadian MTNs issued by ENB.

While DBRS recognizes that the $4.1-billion mirror note provides ENB with a senior claim on EPA assets ranking ahead of EIF bondholder claims, this factor does not fully offset the increased structural subordination with respect to EPI's assets and the loss of full access to EPA cash flows available prior to the transaction.

Based on its review, DBRS has downgraded all of ENB's ratings by one notch, with stable trends following completion of the transaction.