News Column

Fitch Expects to Rate TTX Company's Senior Unsecured Notes 'A-'

June 9, 2014

CHICAGO--(BUSINESS WIRE)-- Fitch Ratings expects to rate TTX Company's (TTX) proposed $250 million 30 year senior unsecured medium term note issuance 'A-' subject to receipt of final documents conforming to information already received. The final maturity date will be on June 15, 2044 and the fixed rate of interest will be determined at the time of issuance.

Proceeds from the issuance are expected to be used for general corporate purposes, including the repayment of existing indebtedness and the acquisition of new railcars. The notes will rank equally with existing and future senior unsecured notes issued by TTX.

KEY RATING DRIVERS - UNSECURED NOTES

The issuance of the medium term notes is not expected to materially increase balance sheet leverage, as measured on the basis of total debt to tangible equity. Tangible equity is calculated by subtracting from shareholder's equity, TTX's debt issuance costs and deferred tax assets, net of allowance. Proforma as of March 31, 2014, leverage is expected to increase modestly to 1.8x from 1.7x, which remains consistent with TTX's long-term average of 1.8x over the last five years.

The rating of the notes are equalized with the long-term Issuer Default Rating (IDR) of TTX, reflecting the company's robust pool of unencumbered assets available to unsecured noteholders, which provides some financial flexibility in times of market stress.

TTX is currently rated 'A-' with a Stable Rating Outlook based upon the company's unique competitive advantages associated with its ownership structure and regulatory exemption status, as well as its stable operating profile through various economic and market cycles, strong liquidity given consistent operating cash flow generation, and solid capitalization and balance sheet leverage levels. These strengths are counterbalanced by the cyclicality of the rail industry, reliance on the regulatory exemption to maximize the business model and modest profitability.

RATING SENSITIVITIES - UNSECURED NOTES

The rating of the senior unsecured medium term notes is sensitive to changes in TTX's long-term IDR as well as to changes in the company's funding profile, including the mix of secured versus unsecured debt and the level of unencumbered asset coverage. A material increase in the use of secured debt combined with a decline in the level of unencumbered asset coverage could result in notching between the IDR and unsecured medium term notes.

Formed in 1955, TTX is a privately-held corporation based in Chicago, Illinois. The company is a leading provider of railcars in North America, with a fleet of approximately 150,000 as of Dec. 31, 2013.

Fitch expects to assign the following rating:

TTX Company

--Senior unsecured medium term notes 'A-'.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Global Financial Institutions Rating Criteria' (Jan. 31, 2014);

--'Finance and Leasing Companies Criteria' (Dec. 11, 2012).

Applicable Criteria and Related Research:

Global Financial Institutions Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=732397

Finance and Leasing Companies Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=696720

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=833654

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.



Fitch Ratings

Primary Analyst

Johann Juan

Director

+1-312-368-3339

Fitch Ratings, Inc.

70 West Madison Street

Chicago, IL 60602

or

Secondary Analyst

Richard Wilusz

Associate Director

+1-312-368-5459

or

Committee Chairperson

Nathan Flanders

Managing Director

+1-212-908-0827

or

Media Relations

Brian Bertsch, New York, +1-212-908-0549

brian.bertsch@fitchratings.com

Source: Fitch Ratings


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