S&P downshifts Penske view to stable

S&P said it revised its outlook for Penske Truck Leasing Co. LP to stable from positive and affirmed its ratings, including its BBB issuer rating.

“We no longer expect Penske's credit metrics to be supportive of a higher rating, due in large part to its financial policy. Penske's earnings in 2022 benefitted from strong demand for truck transportation and generally favorable macroeconomic conditions. Production problems related to supply chain disruptions also contributed to limited availability of new vehicles for truck operators.

“However, the company's credit metrics in 2022 were somewhat weaker than our previous expectations due to higher dividend outflows as the company paid an additional dividend of $400 million to its owners (in addition to the ongoing dividend calculated at 50% of current year net income). As a result, debt to capital increased to the mid-70% range in 2022 compared with our previous expectation of debt to capital remaining in the low-70% area (in line with 2021 levels),” S&P said in a press release.

The agency said it sees “the operating environment to be somewhat less favorable for the next two years.”

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