Fitch rates Kansas City Southern de Mexico notes B+

Fitch Ratings said it assigned a B+/RR4 rating to the $165 million senior notes due 2014 to be issued by Kansas City Southern de Mexico, SA de CV and affirmed the B+/RR4 ratings assigned to the company's outstanding $178 million 12½% senior notes due 2012, $460 million 9 3/8% senior notes due 2012 and $175 million 7 5/8% senior notes due 2013.

The outlook is stable.

The proceeds of the proposed new issuance will be used primarily to pay off the 12½% notes.

The agency said Kansas City Southern de Mexico's B+ foreign- and local-currency issuer default ratings are supported by the company's solid business position as a leading provider of railway transportation services in Mexico with a diversified revenue base consisting of five main industrial sectors.

Although the company's operating earnings have improved in 2006, Fitch said the ratings continue to reflect Kansas City Southern de Mexico's weak financial profile due to its high leverage and tight liquidity and the challenging environment in which is operates, characterized by fierce competition, higher fuel costs, a depreciating Mexican peso versus the dollar and a general shift in manufacturing to China from several countries, including Mexico.

As of Dec. 31, the total debt-to-EBITDAR ratio was 4.2x, compared with 6.1x in 2005.

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