Moody's upgrades Kansas City Southern de Mexico

Moody's Investors Service said it upgraded Kansas City Southern de Mexico SA de CV's senior unsecured rating to Baa3 from Ba1.

Moody's also said it affirmed the Baa3 rating of the company's senior unsecured credit facility, as well as the Baa3 senior unsecured ratings of parent company Kansas City Southern and subsidiary Kansas City Southern Railway, as well as the Baa1 rating on Southern Capital Corp.'s debt.

The outlook is stable.

The ratings reflect an improving trend in credit metrics resulting from the revenue and yield growth that the company is demonstrating in the current economic environment, particularly in light of higher growth in the Mexican industrial sectors, Moody's said.

While revenue and profit growth are expected to slow among North American railroads due to uncertainties surrounding their economic drivers, the company is in a good position to benefit from higher growth forecasts anticipated in the Mexican economy, the agency said.

Nonetheless, the company's operations are still sensitive to conditions in both the United States and the Mexican economies, which have historically contributed to more volatile financial performance compared to other class I railroads through the economic cycle, Moody's said.

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