KEY RATING DRIVERS
The expected rating is equalized with the ratings assigned to Ryder's existing senior unsecured debt as the new notes will rank equally in the capital structure. The equalization of Ryder's unsecured debt with its long-term Issuer Default Rating (IDR) reflects the company's 100% unsecured funding profile.
Ryder's ratings reflect its established market position in the truck leasing business, its operating consistency, strong liquidity and funding profile, relatively low leverage, and solid capitalization. Rating constraints include the company's pension burden, cyclicality inherent in used vehicle pricing and the commercial rental business, and the regulatory impact on business trends.
Ryder currently has a Stable Outlook, which reflects Fitch's expectation for continued economical access to the capital markets through market cycles, strong liquidity, solid capitalization, and earnings growth in 2014 driven by an increase in full-service lease activity and organic growth in supply chain solutions.
While Fitch believes positive rating action is likely limited over the medium term, positive rating momentum could result from greater revenue diversification and lower leverage.
Negative rating action could be driven by a decline in earnings and/or free cash flow beyond Fitch's expectations which yields an increase in leverage beyond the targeted range and/or indicates a weakened competitive position in the industry. Additionally, deterioration in asset quality, an inability to realize residual values on used vehicles, a material increase in non-earning vehicles, and/or a decline in liquidity could result in negative rating action.
A material shift to secured funding could affect the notching between the long-term IDR and the unsecured debt rating.
Established in 1933 and headquartered in
Fitch expects to assign the following rating:
Ryder System's Inc.:
Fitch currently rates Ryder System's Inc. as follows:
--Long-Term IDR 'A-';
--Short-Term IDR 'F2';
--Commercial Paper rating 'F2';
--Senior unsecured notes 'A-'.
The Rating Outlook is Stable.
Additional information is available at 'www.fitchratings.com'.
--'Global Financial Institutions Rating Criteria' (
--'Finance and Leasing Companies Criteria' (
Global Financial Institutions Rating Criteria
Finance and Leasing Companies Criteria
Source: Fitch Ratings
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