Moody’s rates Penske Truck notes Baa3

Moody's Investors Service said it assigned a Baa3 rating to Penske Truck Leasing Co., LP's $500 million issuance of senior unsecured notes due 2020.

The outlook is stable.

Proceeds are expected to be used to repay outstanding borrowings under the company's revolving credit and ABS facilities.

Moody’s said the Baa3 rating reflects Penske Truck’s well-established position in full-service truck leasing, truck rentals and contract maintenance services for third-party fleets. Free cash flow tends to be counter-cyclical because the company curtails fleet investments during economic downturns while it increases fleet spending during recoveries and expansion. The counter-cyclical nature of free cash flow during downturns offsets the relatively high debt to EBITDA for the investment-grade rating category, the agency said.

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