THE Kansas City Southern (KCS) railway has been rated 'positive' by S&P Global Ratings agency now that its merger with the Calgary-based Canadian Pacific (CP) is a done deal, but still subject to regulatory approval.
The agreement followed its termination of a merger agreement with CP's rival, the Montreal-based Canadian National Railway.
We currently expect to maintain our 'BBB+' issuer credit rating on CP and believe the combined entity will have a significantly larger and more diverse route network following the transaction,' said New York-based S&P Global..
'Therefore, we revised our outlook on KCS to positive from stable and affirmed our 'BBB' issuer credit rating. Nonetheless, we also believe the transaction will face significant regulatory review and will not fully close until the second half of 2022.
'The positive outlook on KCS reflects our expectation that our rating on CP will not change over the next two years, even with incremental debt associated with the proposed merger,' said the rating agency.
Following the US Surface Transportation Board's (STB) rejection of CN's use of a voting trust in its merger proposal, KCS terminated the merger agreement and entered into a new agreement with CP.
'The revised agreement values KCS at US$31 billion, higher than the $29 billion valuation under the initial deal. However, we do not believe incremental debt associated with the transaction will lead to a downgrade of our ratings on CP.
SeaNews Turkey
The agreement followed its termination of a merger agreement with CP's rival, the Montreal-based Canadian National Railway.
We currently expect to maintain our 'BBB+' issuer credit rating on CP and believe the combined entity will have a significantly larger and more diverse route network following the transaction,' said New York-based S&P Global..
'Therefore, we revised our outlook on KCS to positive from stable and affirmed our 'BBB' issuer credit rating. Nonetheless, we also believe the transaction will face significant regulatory review and will not fully close until the second half of 2022.
'The positive outlook on KCS reflects our expectation that our rating on CP will not change over the next two years, even with incremental debt associated with the proposed merger,' said the rating agency.
Following the US Surface Transportation Board's (STB) rejection of CN's use of a voting trust in its merger proposal, KCS terminated the merger agreement and entered into a new agreement with CP.
'The revised agreement values KCS at US$31 billion, higher than the $29 billion valuation under the initial deal. However, we do not believe incremental debt associated with the transaction will lead to a downgrade of our ratings on CP.
SeaNews Turkey
