DBRS Morningstar believes that the ongoing west coast port strikes are seriously disrupting supply chains in the near term as trade comes to a halt. This is causing significant operational disruptions to multiple sectors including the automobile, industrial, railway, fertilizer, and retail sectors. It will also take increasingly longer for supply chains to stabilize relative to the length of the strikes. Despite the significantly disruptive nature of the strikes, we expect that the crisis will...
DBRS Morningstar’s neutral 2023 outlook for the North American railway sector reflects our view that the credit risk profiles of railroads in our portfolio will continue to remain supportive of their current ratings. Despite elevated inflation and interest rates, and our projection of an overall economic slowdown, we forecast railways to show resilient revenue and flat to modestly weakening margins, which should support stable cash flow generation. We believe railways will mitigate margin pressu...
This commentary focuses on climate change impacts on Canadian National Railway Company (CN) and Canadian Pacific Railway Company (CP) operations and infrastructure in response to acute and chronic climate events. We discuss the financial materiality of such extreme weather events on the credit profiles of the Canadian railways vis-à-vis their structural characteristics, notably the large size and scale of their operations, strong liquidity, and the resilience of their balance sheets and business...
Please refer to PDF document for more detail about our research: DBRS Morningstar Confirms Canadian National Railway Company’s Commercial Paper Rating at R-1 (low), Stable Trend, After the Program’s Amendment and Upsizing to $2.5 Billion
On September 17, 2021, Canadian National Railway Company (CN or the Company) reaffirmed its 2021 outlook and unveiled its strategic roadmap. The key announcements included the following: -- Cost reduction measures aimed at growing operating profits and reducing the operating ratio (OR). -- A review of the nonrail assets, including freight-forwarding services and vessels, which could be either partly or fully divested, also with the aim of lowering the OR. -- A reduction in CN's capital expend...
DBRS Limited (DBRS Morningstar) published a commentary reviewing Canadian Pacific Railway Company's (CP Rail; rated BBB (high) and Under Review with Negative Implications by DBRS Morningstar) revised bid for Kansas City Southern (KCS) made on August 10, 2021. DBRS Morningstar continues to be of the view that a negative rating action on CP Rail could be limited to one notch if the transaction with KCS closes. Under the revised proposal, CP Rail has agreed to acquire KCS in a stock and cash transa...
Full Article at IIR has reaffirmed its Recommended rating for PIA after undertaking a review post the appointment of a new Portfolio Manager, Harding Loevner. The full report can be found on the IIR website. On 26 July 2021, Pengana International Equities Limited (PIA) announced a fully franked dividend of 1.35 cents per share for the June quarter. This represents an 8% increase on the March quarter dividend and takes the total dividends declared for FY21 of 5.1 cents per share, fully franked....
On April 21, 2021, DBRS Limited (DBRS Morningstar) placed Canadian National Railway Company's (CN or the Company) Issuer Rating of "A," its Unsecured Bonds, Debentures & Notes rating of “A,” and its Commercial Paper rating of R-1 (low) Under Review with Negative Implications following the announcement that CN Rail has made an offer to combine with Kansas City Southern (KCS) in a stock and cash transaction valued at approximately $42.2 billion (USD 33.7 billion).
Canadian railways recently reported their fourth quarter (Q4 2020) earnings and provided guidance on their plans for 2021. In DBRS Limited's (DBRS Morningstar) commentary Chugging Along: Canadian Railways and the Coronavirus published on May 5, 2020, we discussed important considerations that led us to believe Canadian railways would largely manage the unprecedented disruptions caused by the coronavirus pandemic.
Although a great deal of uncertainty remains related to the severity and duration of the current coronavirus pandemic, Canadian railways reported their first quarter (Q1 2020) earnings and shed some colour on their plans for the rest of 2020 and beyond, and on their ability to weather the current economic fallout from the coronavirus. No industry is immune from the coronavirus and the associated disruptions to the economy and the railway industry, often seen as a reflection of the broader econom...
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