FedEx Corporation

--Long-term IDR 'BBB';

--Senior unsecured 'BBB';

--Unsecured credit facility 'BBB';

--Short-term IDR 'F2';

--Commercial paper program 'F2'.

Federal Express Corporation

--Long-term IDR 'BBB';

--Senior unsecured 'BBB'.

The ratings apply to approximately $1.8 billion in senior unsecured debt obligations and a $1 billion revolving credit facility. The Rating Outlook is Stable.

FedEx's ratings reflect the transportation company's strong market position in the global transportation services industry, robust liquidity position and expectations for ongoing free cash flow strength despite facing the twin challenges of slowing global economic growth and still-high fuel prices. Although FedEx's core express delivery volumes have declined to pre-1998 levels in the U.S., demand continues to grow in the company's ground package delivery business and FedEx Freight continues to perform relatively well given the very difficult market conditions in the less-than-truckload (LTL) sector.

To cope with the weakening economic environment, FedEx has significantly lowered its capital spending forecast for fiscal 2009 and reduced discretionary spending in other areas of the business, both of which will help to preserve free cash flow as margins tighten. FedEx's credit profile may weaken somewhat in the near term, but it is expected to remain consistent overall with the current ratings. Risks include a further significant weakening in the global economy and/or another steep rise in jet fuel and diesel prices, both of which could put additional pressure on free cash flow generation. Longer-term, changes to the employment status of FedEx Ground's independent contractors could result in meaningful increases to FedEx's operating costs.

With the cooling of the global economy, FedEx has seen demand for its express delivery services wane. In the company's fiscal first quarter ended Aug. 31, U.S. express package volume was down 5.2% versus the year-earlier period and in-line with levels seen more than 10 years ago. Adding further pressure to the FedEx Express unit, International Priority volumes, which had been growing as U.S. volumes declined, were flat in the quarter, reflecting, in part, the slowing of economies outside the U.S.