Fitch upgrades CSX

Fitch Ratings said it upgraded CSX Corp.'s issuer default, senior unsecured debt and unsecured credit facility ratings to BBB from BBB- and short-term rating to F2 from F3.

The outlook is stable.

The agency said the upgrade reflects the transformation in the company's credit profile and operating performance that has taken place over the past two years. In that time, CSX has paid down a substantial portion of its balance sheet debt, increased its profitability and improved its service metrics. CSX also shed its CSX World Terminals unit, allowing management to focus on the company's core surface transportation business.

CSX's credit profile was strengthened in 2005 when the company used proceeds from the World Terminals sale to prepay $1 billion in debt. Lease-adjusted debt to EBITDAR has fallen to 3.1x from 3.4x at the end of the third quarter of 2005. Looking ahead, however, Fitch predicted that the pace of debt reduction is expected to moderate somewhat as CSX approaches its capital structure targets.

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