S&P gives BBB to Penske Truck notes

S&P said it assigned its BBB issue-level rating to Penske Truck Leasing Co. LP and PTL Finance Corp.'s senior unsecured notes.

The company will use the proceeds to repay its outstanding debt 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 revenue is 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 (FFO)-to-debt ratio is in the low-to-mid 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 explained.

S&P assesses Penske's business risk profile as strong and its financial risk profile as significant.

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