Tranz Rail downgrade

Tranz Rail has been hit by another credit downgrade, this time from rating agency Moody's.

Moody's says it has lowered its rating on Tranz Rail to B1 from B3.

The company's short-term rating remains Not Prime.

"The rating downgrade reflects Moody's concerns about the liquidity position of Tranz Rail, including need under the terms of the Aratere lease to provide a letter of credit to support its obligations," senior analyst Mable Chan said.

"In addition, the company is yet to renegotiate its bank facility which falls due in November.

"The rating remains on review for further possible downgrade," Chan said.

The Moody's move follows a downgrade by Standard & Poor's last Monday, because of Tranz Rail's weak liquidity position and the challenges it faces to improve its internal cash flow in the near-to-medium term.

Tranz Rail shares closed on Friday down 2c at $1.67.

- NZPA