Fitch Upgrades Kansas City Southern de Mexico to ‘BB-‘

NEW YORK — Fitch Ratings has upgraded the foreign and local currency Issuer Default Ratings (IDRs) of Kansas City Southern de Mexico, S.A. de C.V. (KCSM) to ‘BB-‘from ‘B+’. The Rating Outlook is Stable.

Fitch has also upgraded to ‘BB-‘ from ‘B+’ the following senior unsecured obligations of KCSM:

–US$165 million 7.375% senior notes due 2014:

–US$460 million 9.375% senior notes due 2012;

–US$175 million 7.625% senior notes due 2013.

These rating actions reflect KCSM’s improving operating profile, increased financial flexibility and stronger liquidity over the past two years. Operating EBITDAR, defined as operating EBITDA plus KCSM’s locomotive and railcar lease payments, increased to approximately US$376 million in 2007 compared with US$331 million in 2006 and just US$227 million in 2005. As of Dec. 31, 2007, KCSM had approximately US$1.4 billion in total debt consisting primarily of US$800 million in unsecured senior notes due in 2012-2014 and an estimated US$507 million of off-balance-sheet debt associated with lease obligations. The ratio of total adjusted debt to EBITDAR was 3.6 times (x), an improvement compared with 4.2x in 2006 and 6.1x in 2005. EBITDAR covered fixed expenses, defined as interest expense plus lease payments, by about 2.4x in 2007, compared with 2.1x in 2006 and 1.4x in 2005.

— Business Wire