10:44 AM EDT, 05/28/2024 (MT Newswires) -- S&P Global Ratings said Tuesday that it has affirmed all its ratings on Canadian Pacific Railway (CP.TO) and related subsidiaries, including its "BBB+" issuer credit rating on the company.

In summary, the rating agency believes the freight railroad services provider is "well-positioned" to deleverage to the mid-20% area for funds from operations to debt in 2024 despite the "tepid" recovery of freight volume due to slower economic growth in North America.

S&P expects a "meaningful portion" of the company's approximately C$3 billion in long-term debt maturities in the next 12 months to be repaid from discretionary cash flow consistent with management's deleveraging aspiration post its acquisition of Kansas City Southern (KCS) in late 2021

Accordingly, S&P revised its liquidity assessment on the company to adequate from strong, reflecting large maturities concerning available funding sources. The revision is ratings neutral.

"The stable outlook reflects our expectation that CPKC's FFO to debt (S&P Global Ratings-adjusted) will improve to the 30% area over the next 24 months (from about 20% at year-end 2023) as the company remains disciplined in deploying discretionary cash flow to reduce debt, and earnings improve with economic recovery in North America as well as bespoke benefits from the KCS integration," the agency said.

The company's stock was down 1.5% on last look on Tuesday in Canada.

Price: 108.00, Change: -1.53, Percent Change: -1.40