S&P affirms Kansas City Southern

Standard & Poor's said it affirmed its ratings on Kansas City Southern, including the B corporate credit rating and removed the ratings from CreditWatch with negative implications, where they were placed Jan. 29.

The D rating on the preferred stock was not on CreditWatch, the agency noted, adding that the rating action follows the company's announcement that its wholly owned subsidiary, The Kansas City Southern Railway Co., has received the requisite number of consents needed to amend the indentures related to its 9 ½% notes due 2008 and its 7 ½% notes due 2009 and that it has received consents from all of the lenders under its credit agreement to waive related defaults.

Prior to the CreditWatch placement, the outlook had been negative and the outlook is now stable, reflecting the company's improved liquidity position and strengthening financial profile, according to S&P.

S&P added that the ratings reflect Kansas City Southern's highly leveraged capital structure, challenges associated with its integration of Kansas City Southern de Mexico S. de RL de CV, the Mexican railroad it acquired in April 2005 and limited albeit improving liquidity.

Offsetting these risks to some extent are the favorable characteristics of the U.S. freight railroad industry and the company's strategically located rail network, the agency noted.

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