CP's debt rating lowered on planned rail
Published: November 29, 2007
Source: Toronto Star
Canadian Pacific Railway Ltd.'s debt has been cut to the lowest
investment-grade rating by Moody's Investors Service, which cites the
carrier's pending purchase of Dakota, Minnesota & Eastern Railroad Corp.
The new rating is Baa3, with a "stable" outlook, Moody's said yesterday.
Calgary-based Canadian Pacific had been at Baa2 with the rating under
Canadian Pacific, Canada's second-largest railway, is awaiting a United
States regulatory decision on the planned purchase.
The Minnesota-based Mayo Clinic, which has facilities adjoining the DM&E
track, opposes the purchase.
"The purchase price of almost $1.5 billion (U.S.) suggests that CP has
paid a premium for the DM&E at a time when the transportation market has
likely already passed its peak," Moody's analyst Michael Mulvaney in New
York wrote in a note.