OREANDA-NEWS. S&P Global Ratings today assigned its 'A' issue-level rating to Omaha-based Union Pacific Corp.'s senior unsecured notes due 2046.

At the same time, the company announced an add-on to its existing senior notes due 2026. Our 'A' issue-level rating on those notes remains unchanged.

Union Pacific will use the proceeds from these issuances for general corporate purposes, including repurchasing its common stock.

Our ratings on Union Pacific reflect the U. S. freight railroad industry's favorable risk characteristics and the company's solid competitive position, moderate financial policies, and strong liquidity. Price competition from other railroads and trucking companies on selected commodities and the company's high capital requirements, which are typical of the industry, somewhat offset these strengths. We characterize the company's business risk profile as strong, its financial risk profile as modest, and its liquidity as strong.

Moderate price increases, strong cost controls, and a commitment to moderate financial policies are the key factors underpinning our ratings on the company. We could raise our ratings on Union Pacific if the company's earnings growth and moderate financial policies cause its funds from operations (FFO)-to-total debt ratio to increase to more than 55% and its free operating cash flow (FOCF)-to-debt ratio to increase to over 30% on a sustained basis.

Although unlikely given the company's significant debt capacity at the current rating level, we could lower our ratings on Union Pacific if its adjusted FFO-to-debt ratio falls below 35% and its FOCF-to-debt ratio declines to less than 17.5% for a sustained period.