CP's debt rating lowered on planned rail buyout
Published: November 29, 2007
Source: Toronto Star
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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 review.

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.