Moody’s changes FedEx view to negative

Moody's Investors Service said it affirmed FedEx Corp.’s Baa1 senior unsecured and P-2 short-term and the pass through certificates ratings.

The outlook was changed to negative from stable following FedEx's announcement that it intends to make an all-cash public offer of €4.4 billion ($4.8 billion) to acquire TNT Express NV (Baa2 negative).

FedEx plans to fund the acquisition by using available cash and through issuing new debt.

Mood’s said the revised outlook recognizes the strategic rationale for the planned TNT Express acquisition and the longer term integration risks, but also that the acquisition will be largely debt financed, comes soon after the debt funded purchase of logistics provider Genco and that the transaction is being initiated during a still uncertain economic environment in Europe and globally.

Funding for the Genco acquisition will limit the previously anticipated deleveraging at FedEx, which has leverage metrics that are at the weaker end for the rating category, the agency said.

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