S&P rates Burlington Northern debentures A+

S&P said it assigned its A+ issue-level rating to Burlington Northern Santa Fe LLC's proposed senior unsecured debentures.

The company will use the proceeds for general corporate purposes, including debt repayment, capital spending and shareholder distributions.

S&P said the A+ issuer credit rating reflects the favorable fundamentals of the North American freight railroad industry, given the limited competition from alternate modes of commercial freight transport for some commodities, the formidable barriers to entry and the moderate cyclicality.

The company’s capital structure consists primarily of senior unsecured debt issued at the parent level and a modest amount of debt issued by its railroad subsidiaries, the agency explained.

“We rate the company's unsecured debt A+, which is the same level as our issuer credit rating on BNSF, because no significant elements of subordination risk are present in its capital structure,” S&P said in a news release.

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