Moody’s Downgrades RXO’s Debt to Ba3, Shifting It Below Investment Grade
Moody's cut RXO’s senior unsecured debt rating to Ba3, pushing it below the Baa3 investment-grade threshold. The agency cited rising net leverage above 3.5x EBITDA and projected cash flow volatility, and placed the rating on negative outlook, underscoring growing refinancing pressures.
1. Moody's Lowers RXO's Debt Rating
On February 13, Moody's Investors Service lowered RXO's senior unsecured debt rating from Baa3 to Ba3, marking the first time the logistics firm’s debt has fallen below the investment-grade threshold.
2. Agency Cites Leverage and Cash Flow Risk
The ratings agency pointed to net leverage climbing above 3.5x EBITDA and forecast cash flow volatility driven by integration costs and market rate fluctuations as key downgrade factors.
3. Financing Costs and Refinancing Pressure
The move is expected to increase RXO's future borrowing costs, forcing a premium yield on any debt issuance and complicating refinancing for roughly $300 million of notes maturing by 2028.