TC Energy Corp. (TRP) receives Old York Operational Quality (BBB) Rating for fiscal year 2025
(BBB) | Energy | Midstream Infrastructure
By: Old York Financial
A Private Principal Research Report
the verdict
Old York Financial has assigned TC Energy (TRP) an Operational Quality (BBB) Rating. TRP is a "Machine in Recovery" following a massive structural overhaul that saw it spin off its liquids business (South Bow) and execute a multi-billion dollar asset divestiture program to mend its balance sheet. 2025 was a year of "Stabilization," with Comparable EBITDA reaching $11.0 Billion. It earns a (BBB) because, while the "Core Natural Gas Gear" is world-class, the company is still carrying the heavy residue of the Coastal GasLink cost escalations which ballooned to $14.5 Billion. TRP remains in the "Penalty Box" until it proves it can execute its $12B growth backlog without the massive capital "Friction" that has historically eroded shareholder principal.
the old york analysis
owner earnings: the deleveraging treadmill In the TC Energy model, we analyze a machine that is legally obligated to prioritize debt reduction and dividend growth over aggressive new expansion.
2025 Net Cash from Operations: $7.35 Billion
(-) Maintenance CapEx (Estimated): ($1.85 Billion)
(+) Depreciation & Amortization: $5.40 Billion (Post-Spinoff Adjusted)
OLD YORK OWNER EARNINGS: $10.9 Billion
Analyst Note: TRP’s "Owner Earnings" are recovering, but the "Friction" is in the debt service. The company paid $3.4 Billion in interest expense in 2025, nearly 46% of its operating cash flow. While the $3.51 annualized dividend is covered, the company is still reliant on asset sales (like the $3.9B Prince Rupert Gas Transmission divestiture) to fund its growth stack. For a principal, this is a "Lean" machine that is still paying for past engineering delusions.
growth & market dominance
Total NGTL Receipts: 15.5 Bcf/d (Record level).
The Data Center Gear: TRP has identified a massive new growth lever, with 1.5 Bcf/d of bids recently received for its Columbia Gas expansion specifically to serve AI data centers.
Pricing Power: REGULATED RECOVERY. Over 95% of EBITDA is regulated or under long-term contracts. TRP’s moat is its "Irreplaceable Geography", owning the primary exit route for Western Canadian gas to reach global LNG markets.
Moats: THE LNG LINK. With Coastal GasLink now mechanically complete and feeding the first Canadian LNG shipments, TRP has secured its "Toll Bridge" status for the next 40 years. The moat is deep, but the cost to build it was nearly ruinous.
operational efficiency
Project Execution: Placed $8.3 Billion of projects into service in 2025. Crucially, newer projects like the VR and WR projects in the U.S. were delivered on time and below budget.
System Reliability: Achieved 91% availability across the pipeline network, driving 15 separate flow records in 2025.
Cost Efficiency: Achieved ~8% reduction in net capital expenditures versus the mid-point of guidance.
Analyst Note: Management is finally fighting "Friction." The move to a "Selective Growth" model capping annual net CapEx at $5.5B–$6.0B is a vital safety valve. TRP is no longer trying to build everything at once; they are focusing on "In-Corridor" expansions where the risk of cost overruns is lower.
the fortress check
Total Debt: ~$50 Billion (Net of spinoffs and sales).
Debt to EBITDA: 4.8x (Down from a "Scary" 5.4x in prior years).
Dividend Yield: ~5.8% (26 consecutive years of growth).
Capital Allocation: THE DIVIDEND TENSION. TRP raised its dividend by 3.2% for 2026. However, with $6B in planned annual CapEx, the company has zero "Alpha" left for buybacks. Every dollar is spoken for.
Solvency: STABILIZING. By hitting their 4.75x–4.8x leverage target early, TRP has moved out of the "Speculative" danger zone, but they are one major project failure away from a downgrade back to (BB).
final determination
Rating: Old York Quality (BBB)
Classification: The Regulated Gas Sovereign in Transit.
TC Energy is a "Fixer-Upper Fortress." It receives a (BBB) because its operational performance is currently being used to pay for its historical capital indiscipline. For a principal, TRP is a "Yield Play" that requires constant monitoring of their project management "Gears." If they deliver 2026 without a single cost overrun, they move to (A).
Disclaimer: Old York Financial operates privately as a principal and sells corporate advisory. Old York Financial is not an accountant, a financial advisor, a broker, an agent, a lawyer, or a portfolio manager. This report is for informational purposes only.
