Moody’s gives Baa2 to FedEx notes

Moody's Investors Service said it assigned a Baa2 rating to FedEx Corp.’s new senior unsecured notes announced on Jan. 3.

The stable outlook is unaffected.

Proceeds will be used for general corporate purposes, including a voluntary contribution to the company’s tax-qualified U.S. domestic pension plan.

Certain of FedEx’s subsidiaries will guarantee the new notes.

Moody's said it expects no change in adjusted debt or financial leverage because it anticipates that an overwhelming majority of the proceeds will be used to reduce pension underfunding. The company will be trading pension underfunding for higher funded debt, presumably to help lower PBGC (Pension Benefit Guaranty Corp.) premiums that are based on a plan's funded status.

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