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5 min read
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07 Nov 2025
Moody's Ratings
Toronto, November 07, 2025 -- Moody's Ratings (Moody's) has downgraded NorthRiver Midstream Finance LP's (NorthRiver) corporate family rating (CFR) to Ba3 from Ba2, the probability of default rating (PDR) to Ba3-PD from Ba2-PD, and senior secured notes and senior secured bank credit facility ratings to Ba3 from Ba2. The outlook was changed to stable from ratings under review. This concludes the review initiated on October 2, 2025.
The conclusion of the review follows the November 6, 2025 announcement that NorthRiver has closed on funding for the Pipestone transaction. The $552 million bonds will be ring-fenced from NorthRiver into a new unrestricted subsidiary. Proceeds will be used for a combination of debt payment, shareholder distributions and growth capital. We expect the company to fully repay the outstanding balance on its revolver and conserve some cash post transaction to fund growth capital.
The downgrade reflects higher gross leverage following the transaction, which we expect to persist for the duration of the NEBC Connector build out. While the proposed debt will sit at an unrestricted subsidiary and be non-recourse to NorthRiver, following the same structure as the Cabin bonds, the transaction will also erode cash flows available to support growth and service restricted group debt.
RATINGS RATIONALE
NorthRiver's rating is supported by: (1) strong earnings visibility supported by take-or-pay contracts constituting approximately 90% of revenue; (2) a diversified customer base underpinned by strong counterparties; (3) extensive natural gas pipeline and processing footprint concentrated in prolific areas of the Montney with differentiating sour gas processing capacity; and (4) a strong operational track record.
The rating is constrained by: (1) high leverage, with debt to EBITDA sustained above 5x; (2) some exposure to market demand fluctuations involving price and volume risks on interruptible revenue and contract renewals; (3) dependence on continued development of the Montney for growth; and (4) ownership by private equity (Brookfield Infrastructure), with a track record of prioritizing distributions over deleveraging.
NorthRiver's liquidity is adequate. As of Q3-25 and pro-forma for the transaction close, we estimate sources total around C$635 million compared to uses of over C$300 million through year end 2026. The company will have about $35 in cash, full availability under the $600 million revolving credit facility ($400M tranche expiring August 2030, and a $200M tranche expiring August 2028). We expect over $300 million in negative free cash flow through 2026. We expect the company will maintain compliance with its leverage covenant. NorthRiver has limited alternate sources of liquidity as it has pledged all of its assets to secured lenders.
NorthRiver's senior secured notes and first lien term loan B are both rated Ba3, the same as the CFR. Including the revolver, the three tranches are secured on a pari passu basis and these instruments represent the preponderance of liabilities in the capital structure. If the Term Loan B is fully repaid or refinanced with unsecured debt, first lien security for the notes falls away and the rating on the notes could change depending on the capital structure at that time.
The stable outlook reflects our expectation that NorthRiver will generate steady EBITDA and maintain good revenue visibility. The outlook also incorporates good execution through the Connector buildout, with some uptick in financial leverage and negative free cash flow.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be downgraded if Moody's adjusted gross debt to EBITDA is sustained above 6x (6.5x on a fully consolidate basis), there is a decline in EBITDA or weakening of contract renewals or terms.
The ratings could be upgraded if Moody's adjusted gross debt to EBITDA sustained below 5x (5.5x on a fully consolidated basis) with steady EBITDA growth and track record of a more conservative financial policy.
NorthRiver Midstream Finance LP, based in Calgary, Alberta, is a privately-held midstream company that gathers and processes natural gas in northeastern British Columbia and west central Alberta.
The principal methodology used in these ratings was Midstream Energy published in October 2025 and available at
Ratings.Moodys.com. Alternatively, please see the Rating Methodologies page on
https://ratings.moodys.com for a copy of this methodology.
The net effect of any adjustments applied to rating factor scores or scorecard outputs under the primary methodology(ies), if any, was not material to the ratings addressed in this announcement.
REGULATORY DISCLOSURES
For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found on
Ratings.Moodys.com.
For any affected securities or rated entities receiving direct credit support/credit substitution from another entity or entities subject to a credit rating action (the supporting entity), and whose ratings may change as a result of a credit rating action as to the supporting entity, the associated regulatory disclosures will relate to the supporting entity. Exceptions to this approach may be applicable in certain jurisdictions.
For ratings issued on a program, series, category/class of debt or security, certain regulatory disclosures applicable to each rating of a subsequently issued bond or note of the same series, category/class of debt, or security, or pursuant to a program for which the ratings are derived exclusively from existing ratings, in accordance with Moody's rating practices, can be found in the most recent Credit Rating Announcement related to the same class of Credit Rating.
For provisional ratings, the Credit Rating Announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating.
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