(Reuters circulated the following article on January 29.)
NEW YORK — Moody’s Investors Service on Monday revised its rating outlook on U.S. railroad Norfolk Southern Corp. to positive from stable, citing its much better operating performance, profits and cash flow.
Norfolk also has high-quality assets, strong liquidity, conservative financial practices, and a disciplined management approach, Moody’s said.
A positive outlook indicates a rating upgrade is more likely over the next 12 to 18 months.
Norfolk Southern last week reported weaker-than-expected fourth-quarter results, blaming lower freight volumes in some segments on a softer economy. But in the third quarter, net profit had jumped 38 percent on record revenue and higher margins, beating market expectations.
Moody’s currently rates Norfolk Southern “Baa1,” the third-lowest investment grade and among the highest ratings in the transportation sector.
Norfolk Southern’s 5.64 percent bonds due in 2029 traded at a spread of 110 basis points over Treasuries on Jan. 26, their last reported trade, according to MarketAxess.