We understand that Dutch mail company TNT's planned demerger of its express division foresees no capital increase or other cash-raising capital market transaction to reduce debt immediately; we view this as a sign of a slightly more aggressive financial policy for the company. If the proposed demerger is completed, TNT will have reduced earnings and cash flow with which to support its debt and debt-like obligations, in particular pensions. We are placing our long-term 'BBB+' issuer credit rating on TNT on CreditWatch negative and affirming the 'A-2' short-term rating. The CreditWatch placement reflects the possibility that we could downgrade TNT, most likely by one notch, because we believe the company's credit metrics will likely weaken if the demerger takes place.
