Moody's cuts Tranz Rail

Moody's Investors Service downgraded Tranz Rail Ltd. including cutting Tranz Rail Finance Ltd.'s passthrough certificates series 1996 to Caa1 from B2. The outlook is negative.

Moody's said the action was prompted by the increasing uncertainty surrounding Tranz Rail's short-term liquidity issues and the increasing likelihood that the company will be unable to meet its debt repayment commitments in the next few months.

Moody's notes that Tranz Rail will have to rely on asset sales to fund these repayments, and that the status of these sales is unclear at this point.

Moody's understands from public information that Carter Holt Harvey has made a public statement that there is no agreement to buy Tranz Rail's rolling stock assets.

The negative outlook reflects the continuing pressure faced by Tranz Rail in implementing its planned asset sales and the very tight near-term liquidity position of the company, Moody's added.

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