Fitch: Kansas City notes BBB-

Fitch Ratings said it assigned an expected rating of BBB- to the $450 million of 30-year senior unsecured notes to be issued by Kansas City Southern Railway Co. and $725 million of senior unsecured notes with seven-year and 10-year maturities to be issued by Kansas City Southern de Mexico.

The companies are the two principal operating subsidiaries of Kansas City Southern, the agency said.

The outlook is stable.

The proceeds from the new issuance will primarily be used to complete a tender offer for about $570 million of existing notes at Kansas City Southern de Mexico due between 2018 and 2021, Fitch said, and to refinance about $278 million currently outstanding under Kansas City Southern Railway's term loan A due 2018.

This refinancing reflects management's continued efforts to improve its capital structure as Kansas City Southern grows into its investment-grade profile, the agency said.

Although total balance sheet debt increases with this transaction, the impact on leverage is neutral, Fitch added.

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