Tranz Rail derailed again in the ratings

Moody's Investors Service yesterday put Tranz Rail's credit rating on review for a possible downgrade - the rail operator's second ratings blow in two days.

Moody's said it was reviewing Tranz Rail's Baa3/prime 3 ratings after the company announced its forecasts for this year and next year.

Tranz Rail expected a drop in revenue and increase in operating costs compared with Moody's expectations, resulting in substantially lower earnings, the ratings agency said.

Tranz Rail also announced asset writedowns which total between $148 million and $170 million.

"The review will focus on the company's ability to substantially meet the forecast improvement in operating performance in the medium term," Moody's said.

On Wednesday, fellow ratings agency Standard & Poor's placed Tranz Rail on creditwatch with negative implications.

Standard & Poor's said despite extensive restructuring in the past 12 to 18 months, Tranz Rail was unable to reach target cost savings or control revenue losses.

Shares in Tranz Rail yesterday closed down 2c at $2.25.

- NZPA