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Rating Action:

Moody's reviews CSX and Consolidated Rail ratings for possible downgrade

08 May 2007
Moody's reviews CSX and Consolidated Rail ratings for possible downgrade

Approximately $8 billion of debt affected

New York, May 08, 2007 -- Moody's Investors Service placed all debt ratings of CSX Corporation and its subsidiaries under review for possible downgrade -- including the senior unsecured rating of Baa2 and the short-term rating of Prime-2. In a related action, Moody's also place the ratings of Consolidated Rail Corporation debt under review for possible downgrade -- including Equipment Trust Certificates ("ETC") rated at A1. These actions follow CSX's plan to increase its share repurchases by an additional $1 billion, to a total of $ 3 billion (about 15% of total shares), before the end of 2008.

"CSX's plan now marks the most aggressive increase in debt for shareholder enhancement programs among the major railroads, and comes at a time when softer economic conditions could further weaken demand for railroad transportation services", noted Bob Jankowitz of Moody's Investors Service.

Moody's review will assess the amount of additional debt for CSX to fully execute its revised program, and consider CSX's prospective cash flow in relation to that higher debt amount. On February 14, 2007, Moody's provided guidance on specific financial and operating metrics for CSX to maintain its current ratings, including the Baa2 senior unsecured rating.

Moody's expects to complete its review shortly. Given CSX's significant shift to a more aggressive financial policy of shareholder enhancements (including the share repurchases and higher dividends), the weaker financial metrics that will likely be outside of Moody's previous guidance and the slower demand for transportation services that is developing over the near term, Moody's anticipates that the senior unsecured rating will likely be downgraded but still remain investment grade.

The Consolidated Rail Corporation ratings are also under review because the ratings are partly based on the obligations of CSX to make lease payments to Consolidated Rail Corporation for the ETC's and to also support the small amount of senior unsecured debt still outstanding.

On Review for Possible Downgrade:

..Issuer: CSX Capital Trust I

....Preferred Stock Shelf, Placed on Review for Possible Downgrade, currently (P)Baa3

..Issuer: CSX Corporation

....Commercial Paper, Placed on Review for Possible Downgrade, currently P-2

....Issuer Rating, Placed on Review for Possible Downgrade, currently Baa2

....Multiple Seniority Shelf, Placed on Review for Possible Downgrade, currently (P)Ba1

....Senior Unsecured Conv./Exch. Bond/Debenture, Placed on Review for Possible Downgrade, currently Baa2

....Senior Unsecured Medium-Term Note Program, Placed on Review for Possible Downgrade, currently Baa2

....Senior Unsecured Regular Bond/Debenture, Placed on Review for Possible Downgrade, currently Baa2

....Senior Unsecured Shelf, Placed on Review for Possible Downgrade, currently (P)Baa2

..Issuer: CSX Transportation, Inc.

....Senior Secured Equipment Trust, Placed on Review for Possible Downgrade, currently A1

....Senior Unsecured Regular Bond/Debenture, Placed on Review for Possible Downgrade, currently Baa2

..Issuer: Consolidated Rail Corporation

....Senior Secured Equipment Trust, Placed on Review for Possible Downgrade, currently A1

....Senior Unsecured Regular Bond/Debenture, Placed on Review for Possible Downgrade, currently Baa2

..Issuer: Peninsula Ports Authority of Virginia

....Senior Unsecured Revenue Bonds, Placed on Review for Possible Downgrade, currently Baa2

..Issuer: Sea-Land Services. Incorporated

....Senior Secured Regular Bond/Debenture, Placed on Review for Possible Downgrade, currently Baa2

..Issuer: Toledo-Lucas County Port Authority, OH

....Senior Unsecured Revenue Bonds, Placed on Review for Possible Downgrade, currently Baa2

Outlook Actions:

..Issuer: CSX Capital Trust I

....Outlook, Changed To Rating Under Review From Stable

..Issuer: CSX Corporation

....Outlook, Changed To Rating Under Review From Stable

..Issuer: CSX Transportation, Inc.

....Outlook, Changed To Rating Under Review From Stable

..Issuer: Consolidated Rail Corporation

....Outlook, Changed To Rating Under Review From Stable

..Issuer: Sea-Land Services. Incorporated

....Outlook, Changed To Rating Under Review From Stable

CSX Corporation, based in Jacksonville Florida, operates a Class I railroad in the eastern United States.

New York
Michael J. Mulvaney
Managing Director
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Robert Jankowitz
Senior Vice President
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

No Related Data.
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