Swift Comes Off CreditWatch

Swift Transportation is the latest carrier to look to its bankers for help in tough times, and get it.

Standard & Poor’s Ratings Service removed Swift from its CreditWatch list after the truckload carrier's lenders amended its credit agreement.

“The rating action reflects Swift’s improved liquidity position following an amendment to its covenants, reduced capital expenditures and modest debt maturities over the next few years,” Standard & Poor’s credit analyst Anita Ogbara said in a statement.

Swift is the parent of Swift Transportation, the second-largest privately owned U.S. truckload carrier, with about $3.4 billion in revenue in 2008, according to SJ Consulting.

Standard & Poor’s put Swift on its CreditWatch list with “negative implications” in February, as demand for truckload motor carrier services tanked in the recession.

The covenant amendment will make it easier for Swift to meet its liquidity requirements, the credit rating service said. It said it expects “modest improvement” in Swift’s credit metrics and liquidity over the next few quarters as the company cuts costs.

“Still, earnings and cash flow will likely remain under pressure in the near term, given the weak operating environment in the truckload sector,” Ogbara said.

Standard & Poor’s confirmed its CCC+ long-term corporate credit rating for Swift, which indicates the service considers the company “currently vulnerable.”

That vulnerability stems from Swift’s being in a “highly fragmented, cyclical and capital-intensive” business, as well as its “highly leveraged financial profile and its limited liquidity,” Standard & Poor’s said.

“The company’s position as one of the largest truckload carriers in the U.S. and growing positions in the intermodal and dedicated trucking businesses somewhat offset these factors.”

Contact William B. Cassidy at wcassidy@joc.com.