Fitch upgrades Kansas City

Fitch Ratings said it upgraded the ratings on Kansas City Southern and its primary operating subsidiaries, Kansas City Southern Railway Co. and Kansas City Southern de Mexico SA de CV.

The outlook is stable.

Kansas City Southern’s long-term issuer default rating was upgraded to BBB from BBB-, senior unsecured bank facility to BBB from BBB- and senior unsecured notes to BBB from BBB-.

Kansas City Southern Railway’s long-term issuer default rating was upgraded to BBB from BBB- and senior unsecured notes to BBB from BBB-.

Kansas City Southern de Mexico’s long-term foreign-currency issuer default rating to BBB from BBB-, long-term local-currency issuer default rating to BBB from BBB- and senior unsecured notes to BBB from BBB-.

The upgrades reflect the company’s improved credit profile resulting from its efforts to control costs, improve operating margins and maintain a strong balance sheet, Fitch said.

The group’s total adjusted debt-to-EBITDAR ratio has remained relatively steady at about 2.5x over the past few years, the agency said.

Kansas City also made significant strides toward buying equipment off of operating leases, which has improved cash flow and operating margins, Fitch added.

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