Fitch drops Con-way debt, says outlook ‘Negative’

Fitch said demand eroded sequentially worse through each month of the fourth quarter, and early indications suggest the trend continued into January. Fitch said pricing is also under pressure with some carriers lowering rates to maintain volume.

The Associated Press

2/27/2009

CHICAGO — Fitch Ratings on Friday downgraded several ratings of hauler Con-way Inc. because of tough conditions in the trucking industry.

Fitch said it was shifting Con-way’s issuer default rating, senior unsecured rating, and senior unsecured bank facility rating to its lowest investment-grade rating, “BBB-” from “BBB.”

Fitch said the senior unsecured rating applies to $925 million in notes and debentures as well as a $400 million line of credit. It put its rating outlook at “Negative,” implying a possibility of further downgrades sometime in the next year.

Fitch said demand eroded sequentially worse through each month of the fourth quarter, and early indications suggest the trend continued into January. Fitch said pricing is also under pressure with some carriers lowering rates to maintain volume.

“Con-way is relatively well-positioned to withstand this difficult set of operational challenges” because of access to cash, manageable medium-term debt, a nonunion business model, and a mixed product offering. But it still risks a further decline in its free cash flow if the economic downturn is deeper and longer than currently expected, Fitch wrote.

Con-way shares fell 10 cents to $15.46 in early afternoon trading. Earlier shares traded at a 52-week low of $14.75.

Kevin Jones of The Trucker staff can be reached for comment at kevinj@thetrucker.com.