Moody’s drops Asciano, debt to Baa3

Moody's Investors Service said it downgraded the issuer rating of Asciano Ltd. and the senior unsecured ratings of Asciano Finance Ltd. to Baa3 from Baa2.

At the same time, the agency downgraded Asciano Finance’s senior unsecured medium-term note program rating to provisional Baa3 from provisional Baa2.

The outlook is stable.

The downgrade follows the announcement that Asciano received the necessary court and regulatory approvals for the company to be acquired by a consortium of investors. Following the acquisition Asciano will be solely focused on rail haulage with a large concentration to coal haulage. The current ports and other non-rail businesses represent around 36% of revenue and 29% of earnings.

The downgrade concludes the review for downgraded initiated on March 16

"The downgrade reflects the increase in Asciano's business and financial risk owing to lost earnings, reduced diversification and increased exposure to coal haulage, thereby raising its counterparty risk exposure," Moody's vice president and senior credit officer Matthew Moore said in a news release.

"The downgrade also reflect Moody's expectation that the company's financial leverage ratios will remain at weak levels for the rating over at least the next 12-18 months."

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