Moody's rates Kansas City Southern notes Ba3

Moody's Investors Service said it affirmed the Baa3 senior unsecured ratings assigned to Kansas City Southern (KCS), Kansas City Southern Railway Co. (KCSR) and Kansas City Southern de Mexico SA de CV (KCSM), as well as the Baa1 rating assigned to Southern Capital Corp.'s secured equipment notes.

At the same time, Moody's assigned a Baa3 rating to KCSR's proposed $200 million senior unsecured notes offering, and a Baa3 rating to KCSM's proposed $250 million floating rate senior unsecured notes offering.

All outlooks are stable.

On Oct. 24, Kansas City Southern announced $200 million and $250 million senior unsecured notes offerings to be issued by its main U.S. railroad subsidiary KCSR and Mexican subsidiary KCSM, respectively.

The proposed KCSR notes due 2023 will be guaranteed by its parent KCS, while the KCSM notes due 2016 will not be guaranteed by KCSR or KCS.

The majority of the proceeds from these notes will be used to finance the buy-out of equipment leases and to finance the replacement of equipment with near-term lease expirations. A portion of the notes issued by KCSM will be used to refinance approximately $92 million of the company's 8% and 6.125% senior unsecured notes. The respective new notes will be senior unsecured obligations of KCSR and KCSM, and rank equally to all of each issuer's respective senior unsecured debt.

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