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
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
Fitch expects to assign the following rating:
--Senior unsecured medium term notes 'A-'.
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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