June 5, 2012 / 6:42 PM / 5 years ago

TEXT-S&P rates GATX senior unsecured notes 'BBB'

 (The following statement was released by the rating agency)	
 June 5 - Standard & Poor's Ratings Services said today that it has assigned
its 'BBB' issue rating to GATX Corp.'s senior unsecured notes. The issue
is a drawdown under a Rule 415 shelf registration. The company will use proceeds
to repay commercial paper and for general corporate purposes, including working
capital and capital expenditures.	
	
The ratings on Chicago-based GATX reflect its position as a major tank car 	
lessor in North America. The business benefits from fairly consistent tank car 	
lease demand and long-term leases and contracts that produce relatively stable 	
cash flow. However, the ratings also incorporate the company's less 	
predictable revenue and earnings in its portfolio management and American 	
Steamship Co. segments and fairly high debt leverage relative to its peers. 	
Beginning in late 2010, demand and pricing for rail cars began to recover, a 	
trend we expect to persist as long as economic growth continues. This has 	
resulted in improved earnings cash flow. However, we expect the company's 	
credit metrics to remain relatively consistent because of GATX's incremental 	
debt to fund capital spending to meet recovering demand. We characterize 	
GATX's business risk profile as "satisfactory," its financial risk profile as 	
"intermediate," and its liquidity as "adequate" under our criteria.	
	
The outlook is stable. We expect that GATX's credit metrics will remain near 	
current levels through 2012, with EBITDA interest coverage in the low- to 	
mid-2x area, FFO to debt in the low-teens percent area, and debt to capital in 	
the high-70% area, based on our expectations of improving demand for GATX's 	
businesses over that period. We could lower ratings if EBITDA interest 	
coverage declined to less than 2x and FFO to debt declined to less than 10% on 	
a sustained basis. This could result if demand weakened again, leading to a 	
decline in railcar utilization and lease rates, lower shipments of iron ore on 	
the Great Lakes, and lower asset remarketing proceeds. We could also lower 	
ratings if the company's financial policy becomes more aggressive, for 	
example, through a substantial share repurchase or major debt-financed 	
acquisition. An upgrade is unlikely until demand recovers significantly, 	
resulting in EBITDA interest coverage returning to the 3x area and FFO to debt 	
to the mid-teens percent area on a sustained basis, or if the company reduces 	
the debt on its balance sheet, either through debt reduction or equity 	
issuance, to debt to capital in the mid-70% area.	
	
RELATED CRITERIA AND RESEARCH	
  -- Methodology And Assumptions: Liquidity Descriptors For Global 	
Corporate Issuers, Sept. 28, 2011	
  -- Business Risk/Financial Risk Matrix Expanded, May 27, 2009	
  -- Corporate Criteria: Rating Each Issue, April 15, 2008	
  -- Corporate Criteria: Analytical Methodology, April 15, 2008	
	
RATINGS LIST	
GATX Corp.	
 Corporate credit rating          BBB/Stable/A-2	
	
Rating Assigned	
 New senior unsecured notes       BBB	
	
	
Complete ratings information is available to subscribers of RatingsDirect on 	
the Global Credit Portal at www.globalcreditportal.com. All ratings affected 	
by this rating action can be found on Standard & Poor's public Web site at 	
www.standardandpoors.com. Use the Ratings search box located in the left 	
column.	
	
 (New York Ratings Team)	
 

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