FedEx Freight announced that S&P Global Ratings has granted the freight subsidiary a BBB‑ investment‑grade credit rating, the first such rating for the unit as it prepares for its June 1 2026 spin‑off from FedEx Corporation.
The BBB‑ rating places FedEx Freight at the lowest tier of investment‑grade, indicating a low‑risk borrower and a stable outlook. The rating is expected to lower the company’s cost of capital, enabling it to fund operations, refinance existing debt, and support the $4.3 billion dividend to FedEx that will be financed by a $600 million unsecured delayed‑draw term loan and roughly $3.7 billion of other unsecured debt, as well as a $1.2 billion revolving credit facility.
FedEx Freight’s financial profile supports the rating: revenue in the quarter ended November 30 2025 was approximately $2.2 billion, and S&P projects adjusted EBITDA margins to improve from 16‑17 % in 2026 to 20‑21 % by 2028 as yield expansion and cost discipline take hold. The company is also forecasting 1 % revenue growth in 2026, with 3‑4 % growth expected in 2027, reflecting a gradual recovery in the North American less‑than‑trucking market.
John A. Smith, newly appointed President and CEO of the independent FedEx Freight, said the rating “confirms the strength of our network, our diversified customer base, and the disciplined execution that has positioned us for long‑term growth.” R. Brad Martin, Chairman of the Board, added that the rating “provides the financial flexibility needed to accelerate investment in technology and capacity as we transition to a standalone company.”
The rating comes ahead of the company’s Investor Day on April 8 2026, where the leadership team will outline the business profile and value‑creation strategy for the new entity. The spin‑off will also shift FedEx Freight’s fiscal year end from May to December, aligning its reporting with industry peers and simplifying financial planning for the independent company.
FedEx Freight remains the largest LTL carrier in North America, covering 98 % of U.S. ZIP codes and serving a diversified customer base where the largest customer accounts for only 3 % of 2025 revenue. The rating underscores the company’s competitive advantage and positions it to pursue growth opportunities while managing the debt load associated with the spin‑off.
The content on EveryTicker is for informational purposes only and should not be construed as financial or investment advice. We are not financial advisors. Consult with a qualified professional before making any investment decisions. Any actions you take based on information from this site are solely at your own risk.