Moody’s ups Penske Truck debt to Baa2

Moody's Investors Service said it upgraded Penske Truck Leasing Co., LP's senior unsecured debt rating to Baa2 from Baa3.

The outlook is stable.

Penske’s free cash flow tends to be counter-cyclical, and Moody's said it expects improving free cash flow over the near term as the company curtails fleet investments. Along with the predictability of revenue from the full service leases, this approach helps to mitigate the relatively high financial leverage.

Penske does have a sizeable rental business, which depends on current market demand for equipment, which in Moody's view, does not offer the consistent cash flow expected from the full service leases, the agency said.

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