Fitch affirms ratings for Con-way, lowers outlook to ‘negative’

Fitch said the ratings reflect the company’s strong liquidity and small amount of short-term debt coming due, offset by “very challenging industry conditions.”

The Trucker News Services

9/2/2008

CHICAGO — Fitch Ratings has affirmed several key ratings on trucking company Con-way Inc. debt but lowered the outlook from “stable” to “negative.”

Fitch affirmed the company’s issuer default rating, senior unsecured debt and senior unsecured bank facility ratings at “BBB.”

The senior unsecured ratings cover $925 million in notes and debentures and a $400 million revolving credit facility.

Fitch said the ratings reflect the company’s strong liquidity and small amount of short-term debt coming due, offset by “very challenging industry conditions.”

The agency said that after two years of declining volumes, demand for trucking appears to be stabilizing but at weak levels. Overcapacity is still hurting pricing power, even though many small firms have disappeared, Fitch said.

Con-way’s less-than-truckload tonnage has grown steadily since mid-2007 but profit margins are still pressured by rising costs, the agency said.

The weak market and $425 million in new debt to acquire Contract Freighters Inc. have weakened Con-way’s credit metrics, Fitch said.