TEXT - S&P rates Penske Truck Leasing Co L.P.
Jan 14 - Standard & Poor's Ratings Services said today that it has assigned its 'BBB-' rating to senior notes co-issued by Penske Truck Leasing Co. L.P. and PTL Finance Corp. The company will use proceeds to repay outstanding borrowings under the its bank revolver as well as to repay all U.S.-denominated indebtedness under the GE Capital facility. Our ratings on Penske reflect its significant market position in its major businesses--full service truck leasing, contract maintenance, and commercial truck rentals. The company has contracted most of its revenues under long-term leases, which generate relatively stable cash flow, even during periods of economic weakness. Partially offsetting these strengths are its capital intensity, weaker margins in the logistics segment, and exposure to the domestic automotive sector. We view Penske's business risk profile as "satisfactory," its financial risk profile as "significant," and its liquidity as "adequate." The outlook is stable. Given Penske's current fleet replenishment and capital spending plans, we expect debt to increase in 2013, although an upgrade is unlikely over that period. However, if the operating environment improves, we could raise the ratings if funds from operations (FFO) to debt exceeds 30% on a sustained basis, compared with our expectations of about 20%. Alternatively, we could lower the ratings if credit measures fall below our expectations for the ratings, with FFO to debt falling below 15% on a sustained basis. RELATED CRITERIA AND RESEARCH -- Business Risk/Financial Risk Matrix Expanded, Sept. 18, 2012 -- Methodology And Assumptions: Liquidity Descriptors For Global Corporate Issuers, Sept. 28, 2011 -- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008 RATINGS LIST Penske Truck Leasing Co. L.P. Corporate Credit Rating BBB-/Stable/-- New Rating Penske Truck Leasing Co. L.P. PTL Finance Corp. Senior notes BBB-