S&P rates Penske Truck notes BBB-

Standard & Poor's said it assigned its BBB- issue-level rating on Penske Truck Leasing Canada Inc.'s senior unsecured notes.

The notes are guaranteed by Penske Truck Leasing Canada's parent, Penske Truck Leasing Co. LP.

Proceeds will be used to repay the outstanding debt on the company’s revolver and for general corporate purposes.

S&P said the corporate credit rating reflects Penske’s strong market positions in full-service truck leasing and commercial truck rentals. The company's revenues are generated primarily through long-term leases that produce relatively strong and stable cash flow, even in periods of economic weakness.

The rating also reflects Penske's substantial debt usage, as its funds from operations-to-debt ratio is in the low-20% area and its debt-to-capital ratio is in the mid-70% area (as a transportation equipment lessor, Penske can support higher debt leverage than other industrials that we rate similarly).

The agency assesses Penske's business risk profile as "satisfactory," financial risk profile as "significant" and liquidity as "adequate."

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