Research Update: XPO Logistics Inc. Ratings Affirmed On The Spin-Off Of Its Logistics Segment, Outlook Stable

We now expect XPO Logistics Inc. to complete the spin-off of its logistics business, GXO Logistics Inc., in the third quarter of 2021. We believe the company will use the cash proceeds from this transaction to repay a portion of its outstanding unsecured debt, which will offset its smaller scale and increased concentration in a higher-risk industry. Therefore, we affirmed our 'BB' issuer credit rating on XPO. At the same time, we placed our issue-level ratings on the company's secured and unsecured debt on CreditWatch with negative implications. Although we expect XPO to use the proceeds from the spin-off to repay debt, we could lower our issue-level ratings depending on the type of debt it repays. The stable outlook reflects

...- We now expect XPO Logistics Inc. to complete the spin-off of its logistics business, GXO Logistics Inc., in the third quarter of 2021. - We believe the company will use the cash proceeds from this transaction to repay a portion of its outstanding unsecured debt, which will offset its smaller scale and increased concentration in a higher-risk industry. - Therefore, we affirmed our '##' issuer credit rating on XPO. - At the same time, we placed our issue-level ratings on the company's secured and unsecured debt on CreditWatch with negative implications. Although we expect XPO to use the proceeds from the spin-off to repay debt, we could lower our issue-level ratings depending on the type of debt it repays. - The stable outlook reflects our forecast that XPO's credit metrics will benefit from strong demand for freight transportation and its reduced debt load over the next 12 months while remaining in line with our expectations for the rating....

Research Update