TEXT-Fitch on Spectra Energy, Texas Eastern Transmission

(The following statement was released by the ratings agency)

March 17 - Fitch Ratings has affirmed the outstanding ratings of Spectra
Energy Capital, LLC (SEC) and Texas Eastern Transmission, LP (TETCO) as listed
below:
Spectra
--Issuer Default Rating (IDR) at 'BBB';
--Senior unsecured debt at 'BBB';
--Short-term IDR at 'F2';
--Short-term debt (Commercial Paper) at 'F2'.
Texas Eastern
--IDR at 'BBB+';
--Senior unsecured debt at 'BBB+'.

This action affects $2.6 billion of long-term debt and approximately $500
million of short-term debt at SEC and $1.2 billion of long-term debt at TETCO
as of Dec. 31, 2007. The Ratings Outlooks are Stable.

SEC's ratings and Stable Outlook reflect the diversity and quality of its
asset base, the high percentage of cash flows derived from stable pipelines and
gas distribution assets, as well as strong industry fundamentals. The company's
U.S. transmission assets, which include TETCO and other FERC-regulated
pipelines and storage assets serving the Northeast and Southeast markets, have
strong stand-alone credit metrics.

Credit concerns include the structural subordination of SEC's debt to
approximately $6 billion of subsidiary debt and its aggressive capital program.
Additionally, SEC is exposed to commodity price risk through its Empress
natural gas liquids system and its 50% interest in DCP Midstream, LLC (DCP;
Fitch IDR of 'BBB', with a Stable Outlook). While DCP has worked to reduce
commodity exposure through its reliance on less risky percentage of proceeds
contracts, commodity exposure is currently unhedged and, therefore, the
stability and reliability of distributions upstreamed to SEC is difficult to
predict. DCP contributes 35%-40% of SEC's expected funds from operations.

Leverage is expected to increase, as the company has outlined $1.8 billion
of projects in the execution stage and up to a total of $3.5 billion in growth
capital over the next three years. The company has stated that it does not plan
to issue equity in 2008. Fitch expects that cash shortfalls due to SEC's
capital plans are expected to be primarily met through the issuance of
additional debt. As a result, SEC's consolidated credit metrics are expected to
weaken. Fitch expects fiscal 2008 debt to EBITDA of 4 times (x) and EBITDA
interest coverage of 3.6x on a consolidated basis. Fitch believes the ratios
may weaken to 4.0x to 4.5x and 3.2 to 3.6x, respectively, by 2010. At this
level, ratios would be weak for SEC's ratings category but Fitch expects the
ratios to gradually recover as the projects begin to generate return.

It is important to note that Spectra recently held an open season for the
proposed Bronco Pipeline. If constructed, the pipeline will be more than 650
miles in length, will have an initial capacity of more than 1 billion cubic
feet per day and will cost approximately $3 billion to construct. A market
transforming project such as Bronco poses financial and execution risk to
Spectra. At this stage, Bronco has no direct or immediate impact on SEC's
rating. However, as further detail becomes available regarding financing
strategy, contractual support and ownership structure it may affect SEC's
credit profile.

In addition to the factors driving Spectra's ratings, Texas Eastern's
affirmation and Stable Outlook reflect the strength of the company's credit
profile and the low level of business risk associated with the FERC-regulated
operations. On a stand-alone basis, the pipeline system has the profile of a
stronger rated entity with moderate debt levels and solid, consistent earnings
and cash flow. As a subsidiary of Spectra Capital, however, the ratings of
Texas Eastern remain linked to that of its parent. Texas Eastern will also
continue to be functionally operated as a single integrated business unit
within Spectra Capital. Texas Eastern and other U.S. operating companies will
also remain reliant on the parent company's pooled credit facilities at Spectra
Capital for any short-term liquidity needs.
(New York Ratings Team)