Fitch Expects to Rate Ryder System Inc.'s Senior Unsecured Notes 'A-'

Tue Feb 18, 2014 4:57pm EST

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(The following statement was released by the rating agency) NEW YORK, February 18 (Fitch) Fitch Ratings expects to rate Ryder System Inc.'s (Ryder) 5 1/2-year, $350 million senior unsecured notes 'A-'. Fitch does not believe there will be a material impact on Ryder's leverage as a result of the issuance, as proceeds are expected to be used to refinance term debt outstanding and for general corporate purposes. A full list of rating actions is at the end of this rating action commentary. KEY RATING DRIVERS The expected rating is equalized with the ratings assigned to Ryder's existing senior unsecured debt as the new notes will rank equally in the capital structure. The equalization of Ryder's unsecured debt with its long-term Issuer Default Rating (IDR) reflects the company's 100% unsecured funding profile. Ryder's ratings reflect its established market position in the truck leasing business, its operating consistency, strong liquidity and funding profile, relatively low leverage, and solid capitalization. Rating constraints include the company's pension burden, cyclicality inherent in used vehicle pricing and the commercial rental business, and the regulatory impact on business trends. Ryder currently has a Stable Outlook, which reflects Fitch's expectation for continued economical access to the capital markets through market cycles, strong liquidity, solid capitalization, and earnings growth in 2014 driven by an increase in full-service lease activity and organic growth in supply chain solutions. RATING SENSITIVITIES While Fitch believes positive rating action is likely limited over the medium term, positive rating momentum could result from greater revenue diversification and lower leverage. Negative rating action could be driven by a decline in earnings and/or free cash flow beyond Fitch's expectations which yields an increase in leverage beyond the targeted range and/or indicates a weakened competitive position in the industry. Additionally, deterioration in asset quality, an inability to realize residual values on used vehicles, a material increase in non-earning vehicles, and/or a decline in liquidity could result in negative rating action. A material shift to secured funding could affect the notching between the long-term IDR and the unsecured debt rating. Established in 1933 and headquartered in Miami, Florida, Ryder is one of the world's largest providers of highway transportation services. As of Dec. 31, 2013, the company had 161,100 vehicles in its full-service and commercial rental fleet and generated $6.4 billion of revenue during 2013. Ryder's stock is listed on the NYSE under the ticker 'R'. Fitch expects to assign the following rating: Ryder System's Inc.: --$350 million senior unsecured notes due 2019 'A-'. Fitch currently rates Ryder System's Inc. as follows: --Long-Term IDR 'A-'; --Short-Term IDR 'F2'; --Commercial Paper rating 'F2'; --Senior unsecured notes 'A-'. The Rating Outlook is Stable. Contact: Primary Analyst Katherine Hughes Associate Director +1-312-368-3123 Fitch Ratings, Inc. 70 West Madison Street Chicago, IL 60602 Secondary Analyst Meghan Neenan, CFA Senior Director +1-212-908-9121 Committee Chairperson Nathan Flanders Managing Director +1-212-908-0827 Media Relations: Brian Bertsch, New York, Tel: +1 212-908-0549, Email: brian.bertsch@fitchratings.com. Additional information is available at 'www.fitchratings.com'. Applicable Criteria and Related Research: --'Global Financial Institutions Rating Criteria' (January 2014); --'Finance and Leasing Companies Criteria' (Dec. 11, 2012). Applicable Criteria and Related Research: Global Financial Institutions Rating Criteria here Finance and Leasing Companies Criteria here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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