Fitch downgrades CSX

Fitch Ratings said it downgraded its ratings of CSX Corp., including its issuer default rating to BBB- from BBB, senior unsecured rating to BBB- from BBB, unsecured bank facility rating to BBB- from BBB and short-term rating to F3 from F2. The senior unsecured rating applies to about $6 billion in debt.

The outlook is stable.

The downgrade reflects expectations for negative changes in the company's credit profile as a result of the recently-announced $1 billion increase in the company's share repurchase program and 25% increase in its dividend payout, the agency said. Fitch said it expects that at least a portion of the cash impact of these enhanced shareholder-friendly actions will likely be debt-financed, increasing leverage beyond earlier projections.

Although industry volume growth has slowed considerably over the past six months, Fitch said it expects pricing to remain relatively strong, which should help all the class I railroads better weather a weakened U.S. economy and lessen the magnitude of the cyclicality experienced in earlier economic downturns.

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