Feb 20 - Fitch Ratings expects to rate Ryder System's Inc.'s (Ryder) six-year, $250 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 debt maturities, repay commercial paper outstanding and for general corporate purposes. A full list of rating actions is at the end of this rating action commentary.
RATING ACTION RATIONALE
Ryder currently has a Stable Rating 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 2013 driven by an increase in full service lease activity and organic growth in supply chain solutions.
RATING DRIVERS AND SENSITIVITIES
While Fitch believes positive rating actions are likely limited to the current rating category, positive rating momentum could result from greater revenue diversification, operating performance that is consistent with Fitch's expectations and broader industry performance, and the maintenance of solid liquidity and capitalization ratios.
Negative rating action could be driven by 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 material increase in non-earning vehicles, a decline in liquidity, or an extended increase in leverage beyond the targeted range.
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, 2012 the company had 172,500 vehicles in its fleet and $6.3 billion of annual revenues. Ryder's stock is listed on the NYSE under the ticker 'R'.
Fitch expects to assign the following rating:
Ryder System's Inc.:
--$250 million senior unsecured notes due 2018 'A-'.
Fitch currently rates Ryder System's Inc. as follows:
--Long-Term Issuer Default Rating 'A-';
--Short-Term Issuer Default Rating 'F2';
--Commercial Paper Rating 'F2'; and
--Senior unsecured notes 'A-'
The Rating Outlook is Stable.