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S&P gives Kansas City Southern notes B+
Standard & Poor's said it in a corrected rating to clarify recovery criteria that it assigned its B+ rating to Kansas City Southern de Mexico SA de CV's proposed $250 million of senior notes due 2018.
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 at B/stable).
Based on S&P's recovery criteria for Mexico, the recovery rating is capped at 2, indicating that lenders can expect very high recovery in the event of a payment default, the agency said, adding that the company will use proceeds from the debt issue, along with other borrowings, to tender for up to $240 million of the company's $460 million 9.375% senior notes due 2012.
"The 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 SA de CV, the Mexican railroad company it acquired in April 2005," said credit analyst Anita Ogbara.
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