Fitch downgrades YRC Worldwide, shares sink

Fitch Ratings noted that while it expects YRC will maintain sufficient liquidity and remain in compliance with its debt covenants through the end of this year, “the likelihood of a covenant breach and/or liquidity squeeze in the second quarter of 2009 has increased materially.”

The Associated Press

10/14/2008

CHICAGO — Fitch Ratings downgraded the issuer default rating of YRC Worldwide Inc. further into junk status Tuesday, citing the potential for continued slumping demand in the less-than-truckload industry and increased near-term credit risk.

Shares of YRC plunged $1, or 16.9 percent, to $4.91 in morning trading, after earlier hitting an all-time low of $4.44. The stock’s lowest point this year had been $4.80.

The credit rating agency cut the issuer default rating of YRC, one of the country’s largest trucking companies, and its subsidiaries Roadway LLC and YRC Regional Transportation Inc. by three notches to “B” from “BB.”

Fitch’s ratings apply to about $1 billion in debt and a $950 million revolving credit facility. The ratings outlook is “Negative.”

“Over the past month, economic trends have worsened materially, indicating a more rapid slowing of the global economy than previously expected,” Fitch said in a statement. “This slowdown in global economic growth likely will have a negative effect on YRC Worldwide’s primary retail and industrial customer base.”

Fitch suggests this could drive the company’s sales and earnings “well below” prior forecasts.

The agency noted that while it expects YRC will maintain sufficient liquidity and remain in compliance with its debt covenants through the end of this year, “the likelihood of a covenant breach and/or liquidity squeeze in the second quarter of 2009 has increased materially.”