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TEXT - S&P rates TTX Co notes
November 19, 2012 / 8:20 PM / 5 years ago

TEXT - S&P rates TTX Co notes

Nov 19 - Standard & Poor's Ratings Services said today that it has assigned
its 'A+' rating to TTX Co.'s $250 million 3.05% unsecured notes due 2022. The
ratings on Chicago-based TTX Co. reflect the company's dominant market position
in the leasing of intermodal railcars in North America, a business that provides
a critical service to its major customers, who depend on TTX to provide them
with most of their intermodal cars. This has resulted in strong and consistent
credit measures, even during periods of economic weakness, such as the recession
that ended in mid-2009, as well as periods of heavy capital spending, which
began to increase in mid-2011. The ratings also incorporate the company's
ownership by its customers, the same North American freight railroads, which can
result in pressure for rate reductions or special dividends. Intermodal traffic
began to recover in late 2009 and has since returned to close to the
prerecession levels in 2007. Standard & Poor's characterizes TTX's business risk
profile as "strong," its financial risk profile as "modest," and its liquidity
as "adequate" under our criteria.

The outlook is stable. We expect higher levels of capital spending through 
2013 as a result of continuing strong demand for domestic intermodal 
equipment, relative to the unsustainable low levels in 2009 and 2010. As a 
result, we expect debt levels to rise. However, with increased earnings and 
cash flow from higher utilization rates and a larger fleet, we anticipate 
TTX's credit metrics will deteriorate only modestly and remain appropriate for 
the ratings. We expect EBITDA interest coverage of at least 3x, funds from 
operations (FFO) to total debt in the midteens percent area, and debt to 
capital in the mid-60% area over this period. If revenues, earnings, and cash 
flow came under pressure for an extended period, resulting in FFO to debt 
declining to the low-teens percent area for a sustained period, we could lower 
the ratings. We don't foresee an upgrade for TTX. We primarily rate the 
company's owners, the major North American railroads, in the 'BBB' category. 
In addition, if earnings and cash flow strengthen significantly, this would 
likely lead to a rate reduction for the railroads, as has occurred in the 
past, bringing earnings and cash flow back into line with our expectations. 
Both of these factors effectively cap the current rating level. 
  
RELATED CRITERIA AND RESEARCH
     -- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008


RATINGS LIST 

TTX Co.
 Corporate Credit Rating                  A+/Stable/--

New Rating 

TTX Co.
 $250 mil 3.05% unsecd notes due 2022     A+

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