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
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
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.