S&P assigns BBB to FedEx notes

S&P said it assigned its BBB issue-level rating to FedEx Corp.'s unsecured notes.

The company will use the proceeds for working capital and general corporate purposes, including to make a voluntary incremental contribution to its U.S. pension plans.

S&P said the corporate credit rating reflects FedEx’s strong competitive position and good cash-generating capability.

However, these positive factors are slightly offset by the company's participation in competitive and somewhat cyclical markets and its sizeable postretirement benefit and operating lease obligations.

“FedEx also spends a significant amount of its cash on shareholder rewards, although we expect that its spending on shareholder rewards will moderate going forward due to the debt and integration costs associated with its May 2016 acquisition of TNT Express NV,” S&P said in a news release.

“We assess FedEx's business risk profile as strong, its financial risk profile as satisfactory, and its liquidity as strong.”

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