Standard & Poor’s Ratings Services gave a “BBB” rating to new CSX long-term debt notes, saying the eastern-U.S. railroad has offset traffic weakness with cost controls, price hikes and efficiency gains.
The company made a private offer to exchange up to $660 million of outstanding debt for senior unsecured notes due in 2040 and paying interest of 6.22 percent.
S&P credit analyst Anita Ogbara said “despite its decision to employ a more leveraged capital structure, management has repeatedly stated that it is firmly committed to retaining an investment-grade rating." She said the debt rating is based “on the expectation that the company will continue to manage its shareholder-reward and capital-investment programs in a way that will preserve ratings at the current level."
Its CSX Transportation unit has seen volume decline with the economic downturn, S&P said “CSX offset volume declines with effective cost controls, lower fuel expense and efficiency gains” along with “favorable pricing.”
The carrier reduced its operating ratio of expenses as a percent of revenue, S& P said, which reflects its efficiency improvements.
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