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Moody's changes outlook on Deutsche Bahn, Deutsche Bahn Finance

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Moody's changes outlook on Deutsche Bahn, Deutsche Bahn Finance

Moody's on Oct. 8 changed the outlooks on Deutsche Bahn AG and its financing company, Deutsche Bahn Finance GmbH, to negative from stable.

The negative outlook reflects the agency's expectation that Deutsche Bahn's leverage will increase to around 7.0x in fiscal 2019, as well as the challenges that the company faces in reducing its gross debt over the next 12 to 18 months and in bringing its leverage toward the 5.5x level.

The agency affirmed Deutsche Bahn Finance's Aa1 backed senior unsecured regular debt rating.

Separately, S&P Global Ratings upgraded Deutsche Bahn's long- and short-term issuer credit ratings to AA/A-1+ from AA-/A-1+, with a stable outlook on the long-term rating. The agency upgraded Deutsche Bahn Finance's senior unsecured debt rating to AA from AA-.

The upgrades reflect the agency's expectation of increased support for Deutsche Bahn, the German state railway company, as a result of the German government's climate action plans. The plans include injecting €1 billion a year into Deutsche Bahn from 2020 to 2030, to help fund investments, as well as a €2 billion deeply subordinated hybrid note that the agency expects to create a loss-absorbing buffer for the company.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings. Descriptions in this news article were not prepared by S&P Global Ratings.