Moody’s upgrades XPO rating to Ba1 on margin gains

Moody's Ratings agency has upgraded XPO, Inc.'s credit rating from Ba2 to Ba1, citing strong financial performance and operational improvements. The agency also raised the ratings on XPO's senior secured bank credit facility and senior secured notes.

This upgrade reflects XPO's successful execution of its multi-year operating improvement strategy, despite challenges in the freight market, which is only now beginning to recover. XPO has seen sustained margin expansion and stronger earnings, driven by yield improvement, increased utilization of Yellow Corporation's service centers, and cost efficiencies enabled by technology.

As of June 30, 2026, XPO's adjusted debt-to-EBITDA was approximately 2.8x. This metric is expected to decline to around 2.6x by the end of 2026 and further to 2.2x in 2027. The company's EBITDA margin has remained above 17% consistently.

For the first half of 2026, XPO's revenue grew about 10% year-over-year, primarily due to strong performance in North American LTL operations. The company's liquidity position is robust, with a $600 million revolving credit facility, $69 million available under a letters of credit facility, and a cash balance of $298 million.

XPO is also considering the divestiture of its European transportation platform, which could reduce diversification but is expected to expedite deleveraging efforts. The company has already repaid $200 million of term-loan principal in 2026 and has no significant debt maturities until 2028.