TEXT - Fitch expects to rate Penske Truck Leasing Canada Inc snr unsecured notes
Jan 28 - Fitch Ratings expects to rate up to C$400 million of five year senior unsecured debt issued by Penske Truck Leasing Canada Inc. (PTL Canada), a wholly owned subsidiary of Penske Truck Leasing Co., L.P. (PTL), 'BBB+'. The notes are expected to be guaranteed by PTL and will rank equally with all of the company's existing unsecured debt. Fitch does not believe there will be a material impact on the PTL's leverage as a result of the issuance, as proceeds will be used to repay borrowings in Canada and reduce the intercompany debt balance. SENSITIVITY/RATING DRIVERS PTL currently has a Stable Rating Outlook, which reflects Fitch's expectation for strong liquidity, higher capitalization, and earnings growth in 2013 driven by an increase in contractual full service lease activity, and organic growth in logistics. Fitch believes positive rating momentum could result from demonstrated access to the unsecured markets through market cycles, increased funding diversification, reduced leverage, and operating performance that is consistent with Fitch's expectations and broader industry performance. Negative rating action could be driven by an inability to economically access the unsecured markets, a decline in earnings and/or free cash flow beyond Fitch's expectations, deterioration in asset quality, an inability to realize residual values on used vehicles, a reduction in liquidity or an extended increase in leverage beyond the targeted range. Established in 1988 and headquartered in Reading, Pennsylvania, PTL is a leading provider of full service truck leasing, truck rental, contract maintenance and logistics services. PTL is a partnership between GECC (49.9%), Penske Corporation (41.1%) and Penske Automotive Group (9%). Formed in 1994, with principle offices in Ontario, PTL Canada is one of the largest full service truck leasing and rental companies in Canada. At Dec. 31, 2012, the company managed a fleet of approximately 11,200 trucks, tractors and trailers. For the 12 months ended Sept. 30, 2012, the company generated approximately C$230 million in operating revenue and C$127 million of earnings before interest taxes and depreciation. Fitch expects to assign the following rating: Penske Truck Leasing Canada Inc.: --C$400 million senior unsecured notes due 2018 'BBB+'. Existing ratings for Penske Truck Leasing Co., L.P. are as follows: --Long-term Issuer Default Rating 'BBB+'; and --Senior unsecured notes 'BBB+' The Rating Outlook is Stable.