S&P changes RXO outlook to stable

S&P said it changed its outlook for RXO Inc. to stable from positive and affirmed its BB+ ratings on the company and its senior unsecured notes. The 3 recovery rating (rounded estimate: 60%) is unchanged.

“We no longer expect RXO's credit metrics will support an upgrade in 2023.RXO, like other truck brokers, faces a weaker freight transportation environment in 2023 following an extended period of strong pricing and demand. Lower overall macroeconomic activity, along with consumers spending more on services and less on goods, has reduced demand for truck transportation.

“Meanwhile, trucking companies have not meaningfully reduced capacity. This dynamic has contributed to spot market pricing falling approximately 40% in recent weeks from its peak in early 2022. Outside its core truck brokerage business, RXO also faces lower demand and pricing for its other services,” S&P said in a statement.

However, the agency said it still sees RXO beating the broader truck brokerage market, which should buoy credit metrics commensurate with the ratings.

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