RXO Loses Investment-Grade Status as Freight Recession Squeezes America's Biggest Brokers

Moody's has stripped freight brokerage giant RXO of its investment-grade credit rating, cutting it one notch to Ba1, a move that underscores just how deep the pain runs in America's trucking sector even as the market shows early signs of tightening.

The downgrade, announced on Tuesday, applies to RXO's senior unsecured notes, its corporate family rating, and its probability of default rating. It also covers a newly announced $400 million debt offering due in 2031, which RXO is using to refinance higher-cost notes maturing in 2027. The company's leverage sits at roughly 4.0x debt-to-EBITDA — double the ratio at rival C.H. Robinson, which comfortably retains its investment-grade standing two notches above.

Moody's maintained a negative outlook on the company, citing weak credit metrics, breakeven free cash flow, and what it called an uncertain path to earnings recovery in a volatile freight market. RXO's EBITDA margin fell to just 1.2 percent in the fourth quarter, down from 2.5 percent a year earlier, though Moody's projects a modest recovery to around 3.4 percent through 2026.

The timing is particularly awkward for RXO. Rising spot rates — ordinarily good news for the freight sector — are actually compressing margins for brokers who locked in lower contract rates and must now secure carrier capacity at higher prices. It is a structural bind that illustrates the uneven nature of any nascent market recovery.

RXO pushed back firmly on the downgrade, telling FreightWaves it maintains a strong balance sheet and significant access to capital. The company's stock, however, tells a different story — down more than 37 percent over the past year, while C.H. Robinson has surged nearly 46 percent over the same period.

The widening gap between the two largest US freight brokerages is fast becoming one of the defining financial narratives of the prolonged downturn.