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Moody's downgrades CSX
Moody's Investors Service said it downgraded CSX Corp.'s issuer rating, senior unsecured convertible bond rating and senior unsecured regular bond rating to Baa3 from Baa2 and commercial paper rating to P-3 from P-2.
This concludes the review for possible downgrade begun on May 8, and the outlook is stable.
The agency attributed the downgrade to CSX's plan to increase its share repurchases by an additional $1 billion to a total of $3 billion (about 15% of total shares) before the end of 2008 and to fund a meaningful portion of the repurchases with debt, meaning the retained cash flow-to-debt, EBIT-to-interest and debt-to-EBITDA ratios are likely to weaken.
Taken together, the expectation of weakened financial metrics, the more aggressive financial policy and the challenging operating environment that is developing are consistent with the revised Baa3 senior unsecured rating, Moody's said.
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