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S&P rates Kansas City Southern notes BB-
Standard & Poor's said it assigned its BB- rating to Kansas City Southern Railway Co.'s proposed $190 million senior notes due 2013.
The issue-level rating on the notes is one notch higher than the corporate credit ratings on the company and its parent, Kansas City Southern (both entities rated B+/developing), the agency said.
S&P added that it assigned a 2 recovery rating to this debt, indicating that lenders can expect substantial recovery in the event of a payment default.
The company will use proceeds from the debt issue, along with other borrowings, to repurchase the $200 million 7.5% senior notes due 2009, the agency said, noting that ratings on Kansas City Southern reflect its highly leveraged capital structure, substantial capital spending requirements, and challenges associated with its integration of Kansas City Southern de Mexico S de RL de CV.
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