(The Associated Pres circulated the following on January 14.)
NEW YORK — Fitch Ratings said Wednesday it has assigned an investment-grade rating to freight railroad operator Norfolk Southern Corp.’s $500 million in new privately placed senior unsecured notes.
The notes mature in 2016. Norfolk Southern expects to tender the notes and offer to replace them with registered notes later in 2009, Fitch said, adding that proceeds from the new notes will be used for general corporate purposes.
Fitch said it has assigned a rating of “BBB+” to the notes, which is considered investment grade. It also said the issuer default rating for Norfolk Southern is “BBB+.” It added that the rating outlook is “Stable.”
“Norfolk Southern’s ratings reflect the railroad’s ongoing strong financial performance and significant financial flexibility despite the rapidly weakening U.S. economy,” Fitch said. “Although carload and intermodal volumes declined in the fourth quarter, ongoing industry pricing strength is expected to bolster revenues despite the reduction in volumes.”
Fitch said credit risks include the company’s heavy share repurchase activity and the potential for increased industry regulation.
Shares of the Norfolk, Va.-based company fell $2.85, or 6.8 percent, to $39.29 in afternoon trading Wednesday. The broader stock market plunged Wednesday on more bad economic news.