New York, May 06, 2014 -- Moody's Investors Service ("Moody's") has assigned
an Aa2 rating to the $351 million Pass Through Certificates,
Series 2014-1 (the "Certificates") that Union Pacific
Railroad Company ("UPRR") plans to issue through the Union
Pacific Railroad Company 2014-1 Pass Through Trust. Moody's
has also affirmed the A3 senior unsecured rating of Union Pacific Corporation,
of which UPRR is an indirect wholly owned subsidiary, and all other
ratings of Union Pacific Corporation. The rating outlook is stable.
RATINGS RATIONALE
UPRR plans to issue the Certificates through the Union Pacific Railroad
Company 2014-1 Pass Through Trust (the "Trust").
The Trust will use the proceeds from the sale of the Certificates to purchase
Equipment Trust Certificates, which will be issued by UPRR to help
finance the acquisition of certain new locomotives. The Equipment
Trust Certificates are direct obligations of UPRR and are secured by a
security interest in these locomotives. The locomotives will consist
of 94 GE ES44AC locomotives and 79 EMD SD70ACe locomotives, with
an estimated aggregate cost of approximately $447 million.
The locomotives have been or will be acquired from the manufacturers on
or after January 1, 2013. Both types of locomotives are high-horsepower,
general purpose locomotives that are used by UPRR as well as other Class
1 railroad operators in North America.
In applying Moody's methodology for Enhanced Equipment Trust and
Equipment Trust Certificates to assign the Aa2 rating to the Certificates,
Moody's has taken into account the following principal considerations.
First, Moody's uses a senior unsecured rating for UPRR of
A2, one notch above the senior unsecured rating for Union Pacific
Corporation, given the structural superiority that results from
the Equipment Trust Certificates holding a claim at the operating company
level. Second, Moody's estimates the initial loan-to-value
of the Equipment Trust Certificates at approximately 80%,
based on the estimated cost of the equipment and the estimated depreciation
of the equipment since delivery. Third, the Equipment Trust
Certificates will each be cross-collateralized and cross-defaulted,
structural features that Moody's believes could enhance the recovery
rate and lower the probability of default, respectively, relative
to transactions that lack these features. And fourth, the
equipment in which the Equipment Trust Certificates have a security interest
consists only of locomotives, a critical asset for the railroad,
and no other rolling stock.
The ratings of the Certificates could change as a result of changes in
the underlying credit quality of UPRR or as a result of changes in the
ratings for Union Pacific Corporation. The ratings could also change
if there was an expected and material change in the fair market value
of the locomotives.
The methodologies used in this rating were Global Surface Transportation
and Logistics Companies published in April 2013 and Enhanced Equipment
Trust And Equipment Trust Certificates published in December 2010.
Please see the Credit Policy page on www.moodys.com for
a copy of these methodologies.
Union Pacific Railroad Company is the principal operating company of Union
Pacific Corporation and operates one of the nation's largest railroad
systems. With approximately 32,000 route miles across the
western U.S. and access to all major coast ports and rail
gateways, the railroad serves the coal, chemicals, automotive,
agriculture and general manufacturing industries.
Assignments:
..Issuer: Union Pacific Railroad Company
....US$351M Senior Secured Equipment
Trust, Assigned Aa2
Outlook Actions:
..Issuer: Union Pacific Corporation
....Outlook, Remains Stable
..Issuer: Union Pacific Railroad Company
....Outlook, Remains Stable
..Issuer: Missouri Pacific Railroad Co.
....Outlook, Remains Stable
Affirmations:
..Issuer: Union Pacific Corporation
....US$2000M Commercial Paper,
Affirmed P-2
.... Issuer Rating, Affirmed A3
....Multiple Seniority Shelf Feb 7,
2016, Affirmed (P)A3
....US$1000M Multiple Seniority Shelf,
Affirmed (P)A3
....US$1000M Multiple Seniority Shelf,
Affirmed (P)A3
....US$1450M Multiple Seniority Shelf,
Affirmed (P)A3
....US$1000M Multiple Seniority Shelf,
Affirmed (P)A3
....US$1000M Multiple Seniority Shelf,
Affirmed (P)Baa2
....US$1000M Multiple Seniority Shelf,
Affirmed (P)Baa1
....US$1000M Multiple Seniority Shelf,
Affirmed (P)Baa2
....US$1000M Multiple Seniority Shelf,
Affirmed (P)Baa1
....US$1450M Multiple Seniority Shelf,
Affirmed (P)Baa2
....US$1450M Multiple Seniority Shelf,
Affirmed (P)Baa1
....US$1000M Multiple Seniority Shelf,
Affirmed (P)Baa2
....US$1000M Multiple Seniority Shelf,
Affirmed (P)Baa1
....US$1225M Senior Unsecured Medium-Term
Note Program, Affirmed (P)A3
....US$400M Senior Unsecured Medium-Term
Note Program, Affirmed (P)A3
....US$200M Senior Unsecured Medium-Term
Note Program, Affirmed (P)A3
....US$200M Senior Unsecured Medium-Term
Note Program, Affirmed (P)A3
....US$200M Senior Unsecured Medium-Term
Note Program, Affirmed (P)A3
....US$250M 6.25% Senior
Unsecured Regular Bond/Debenture May 1, 2034, Affirmed A3
....US$325M 2.75% Senior
Unsecured Regular Bond/Debenture Apr 15, 2023, Affirmed A3
....US$325M 4.25% Senior
Unsecured Regular Bond/Debenture Apr 15, 2043, Affirmed A3
....US$750M 7.875% Senior
Unsecured Regular Bond/Debenture Jan 15, 2019, Affirmed A3
....US$600M 6.625% Senior
Unsecured Regular Bond/Debenture Feb 1, 2029, Affirmed A3
....US$7.1M 9.2%
Senior Unsecured Regular Bond/Debenture Nov 3, 2014, Affirmed
A3
....US$5.25M 9.5%
Senior Unsecured Regular Bond/Debenture Mar 15, 2017, Affirmed
A3
....US$11.5M 9.9%
Senior Unsecured Regular Bond/Debenture May 15, 2018, Affirmed
A3
....US$375.9M 5.78%
Senior Unsecured Regular Bond/Debenture Jun 15, 2040, Affirmed
A3
....US$750M 4.163% Senior
Unsecured Regular Bond/Debenture Jul 15, 2022, Affirmed A3
....US$250M 4.875% Senior
Unsecured Regular Bond/Debenture Jan 15, 2015, Affirmed A3
....US$750M 5.7% Senior
Unsecured Regular Bond/Debenture Aug 15, 2018, Affirmed A3
....US$250M 5.65% Senior
Unsecured Regular Bond/Debenture May 1, 2017, Affirmed A3
....US$250M 6.15% Senior
Unsecured Regular Bond/Debenture May 1, 2037, Affirmed A3
....US$500M 4.75% Senior
Unsecured Regular Bond/Debenture Sep 15, 2041, Affirmed A3
....US$500M 4.75% Senior
Unsecured Regular Bond/Debenture Dec 15, 2043, Affirmed A3
....US$200M 5.375% Senior
Unsecured Regular Bond/Debenture Jun 1, 2033, Affirmed A3
....US$300M 2.95% Senior
Unsecured Regular Bond/Debenture Jan 15, 2023, Affirmed A3
....US$300M 4.3% Senior
Unsecured Regular Bond/Debenture Jun 15, 2042, Affirmed A3
....US$0.31M 9.3%
Senior Unsecured Regular Bond/Debenture Jan 17, 2020, Affirmed
A3
....US$4.1M 9.94%
Senior Unsecured Regular Bond/Debenture Apr 1, 2020, Affirmed
A3
....US$2.5M 10% Senior
Unsecured Regular Bond/Debenture Apr 10, 2020, Affirmed A3
....US$0.525M 9.9%
Senior Unsecured Regular Bond/Debenture Apr 15, 2020, Affirmed
A3
....US$0.25M 9.9%
Senior Unsecured Regular Bond/Debenture Apr 15, 2020, Affirmed
A3
....US$400M 6.125% Senior
Unsecured Regular Bond/Debenture Feb 15, 2020, Affirmed A3
....US$439.192M 3.646%
Senior Unsecured Regular Bond/Debenture Feb 15, 2024, Affirmed
A3
....US$300M 2.25% Senior
Unsecured Regular Bond/Debenture Feb 15, 2019, Affirmed A3
....US$400M 3.75% Senior
Unsecured Regular Bond/Debenture Mar 15, 2024, Affirmed A3
....US$300M 4.85% Senior
Unsecured Regular Bond/Debenture Jun 15, 2044, Affirmed A3
....US$700M 4.821% Senior
Unsecured Regular Bond/Debenture Feb 1, 2044, Affirmed A3
....US$500M 4% Senior Unsecured
Regular Bond/Debenture Feb 1, 2021, Affirmed A3
....US$250M 7.125% Senior
Unsecured Regular Bond/Debenture Feb 1, 2028, Affirmed A3
....US$250M 7% Senior Unsecured
Regular Bond/Debenture Feb 1, 2016, Affirmed A3
....US$500M 5.75% Senior
Unsecured Regular Bond/Debenture Nov 15, 2017, Affirmed A3
..Issuer: Union Pacific Railroad Company
....US$95.01978M Senior Secured
Equipment Trust Oct 15, 2024, Affirmed Aa3
....US$338.951M 5.082%
Senior Secured Equipment Trust Jan 2, 2029, Affirmed Aa2
....US$479.312M 6.176%
Senior Secured Equipment Trust Jan 2, 2031, Affirmed Aa2
....US$109.916M 6.63%
Senior Secured Equipment Trust Jan 27, 2022, Affirmed Aa2
....US$174.2M 6.7%
Senior Secured Equipment Trust Feb 28, 2019, Affirmed Aa2
....US$109.75M 7.6%
Senior Secured Equipment Trust Jan 2, 2020, Affirmed Aa2
....US$101.507M 6.85%
Senior Secured Equipment Trust Jan 2, 2019, Affirmed Aa2
....US$123.826M 6.33%
Senior Secured Equipment Trust Jan 2, 2020, Affirmed Aa2
....US$193.324M 8% Senior
Secured Equipment Trust Jan 10, 2021, Affirmed Aa2
....US$108.894M 6.061%
Senior Secured Equipment Trust Jan 17, 2023, Affirmed Aa2
....US$349.274M 5.866%
Senior Secured Pass-Through Jul 2, 2030, Affirmed Aa2
....US$188.815M 5.404%
Senior Secured Pass-Through Jul 2, 2025, Affirmed Aa2
....US$147.503M 4.698%
Senior Secured Pass-Through Jan 2, 2024, Affirmed Aa2
..Issuer: Missouri Pacific Railroad Co.
....US$69.926M 4.75%
Senior Unsecured Regular Bond/Debenture Jan 1, 2020, Affirmed
A3
....US$67.604M 4.75%
Senior Unsecured Regular Bond/Debenture Jan 1, 2030, Affirmed
A3
....US$100M 5% Senior Unsecured
Regular Bond/Debenture Jan 1, 2045, Affirmed A3
..Issuer: California Pollution Control Financing Auth.
....US$3.45M 9.5%
Revenue Bonds Jan 1, 2022, Affirmed A3
..Issuer: Unif. Govt. of Wyandotte Co./Kansas
City, KS
....US$40M 7.216% Senior
Unsecured Revenue Bonds Oct 1, 2022, Affirmed A2
..Issuer: Westside Intermodal Transportation Corp.
....US$16.78M 7.216%
Senior Unsecured Revenue Bonds Oct 1, 2022, Affirmed A2
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt,
this announcement provides certain regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides certain regulatory disclosures in relation
to the rating action on the support provider and in relation to each particular
rating action for securities that derive their credit ratings from the
support provider's credit rating. For provisional ratings,
this announcement provides certain regulatory disclosures in relation
to the provisional rating assigned, and in relation to a definitive
rating that may be assigned subsequent to the final issuance of the debt,
in each case where the transaction structure and terms have not changed
prior to the assignment of the definitive rating in a manner that would
have affected the rating. For further information please see the
ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this rating action, and
whose ratings may change as a result of this rating action, the
associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Rene Lipsch
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Michael J Mulvaney
MD - Corporate Finance
Corporate Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's assigns Aa2 rating to Union Pacific's Pass Through Certificates, Series 2014-1
