Rail Credit Update: 2Q26 Earnings Recap: CSX, UNP, NSC, CN, and CP

Research evidence excerpt

Rail Credit Update: 2Q26 Earnings Recap: CSX, UNP, NSC, CN, and CP

J P M O R G A N North America Credit Research

30 July 2026

Rail Credit Update

2Q26 Earnings Recap: CSX, UNP, NSC, CN, and CP

Sector Call: Neutral NorthREITs,AmericaTransportationCorporateandCredit -

Sustainable Investing

We upgraded our Rail credit sector call from Underweight to Neutral back in our Mark Streeter, CFA AC

June HG Strategy report (click here) and discussed our view in detail on our (1-212) 834-5086

Transportation Credit Mid-Year Outlook webinar (click here for the replay and the mark.streeter@jpmorgan.com

slide deck, and here for the 13-Jul-26 note where we reshuffled ratings). Since 10- Benjamin Stueck

June-26, rail credit has slightly outperformed on the market backup, depending on (1-212) 270-6757

benjamin.stueck@jpmorgan.com

how you measure performance, as the sector is very 30yr heavy and offers longer J.P. Morgan Securities LLC

duration on average (see our benchmarks tally and sector performance charts

inside). One driver of our more balanced stance for 2H26 despite still tight relative

sector spreads is the fact that the UNP / NSC merger timeline has been extended.

To be clear, our base case remains that the deal is approved with material

concessions. We initially estimated 75% approval likelihood when the deal was

announced, and the market quickly moved towards this figure (peaking at 77%) at

first but has since grown less optimistic. The current merger arb spread implies

60.4%, slightly higher in the last week (low was ~51% in June) since UNP and

CNRCN reached an agreement for enhanced trackage right and facility access,

amongst other “gives” which resulted in CNRCN dropping its opposition to the

deal. For credit investors, perhaps most importantly, we now don’t expect deal