(The Toronto Star posted the following Canadian Press article on its website on February 5.)
MONTREAL — Moody’s Investors Service placed the debt ratings of Canadian National Railway under review today and said it will consider a possible upgrade of Canada’s biggest railway.
“The review recognizes CN’s record of strong free cash flow generation despite the sluggish economic environment,” Moody’s said in a news release.
The big New York bond rater added that CN’s (TSX: CNR) “industry-leading initiatives” to improve railroad productivity should provide a basis for “continued strong free cash flow, efficient integration of its acquisitions, and its progress in reducing financial leverage.”
The credit-rating company said it will review CN’s guaranteed debt, its senior unsecured and medium-term bonds, as well as other securities.
Moody’s said its review will assess the railway’s North American expansion and the effect that better north-south trade flows will have on the operating performance of the Montreal-based railway.
Despite lower net profits in 2002, CN said last month that cash flows rose 16 per cent to $513 million, and the company raised its quarterly dividend by 16 per cent, or 3.5 cents per share, to 25 cents.
CN also said it was continuing a share buyback and was putting some cash aside for acquisitions.
CN operates from coast to coast and into the United States through Chicago to the port of New Orleans.
CN stock closed up 88 cents to $62.65 on the Toronto stock market Wednesday.