OREANDA-NEWS. Fitch Ratings expects to assign a rating of 'BBB+' to the CAD\$125 million senior unsecured debt issued by Penske Truck Leasing Canada Inc. (PTL Canada) maturing June 12, 2020.

The debt is expected to rank pari-passu with all other senior unsecured debt issued by PTL Canada and its parent, Penske Truck Leasing Co., L.P. (PTL) in terms of payment priority.

KEY RATING DRIVERS

SENIOR UNSECURED DEBT
The expected unsecured debt rating is equalized with PTL's Issuer Default Rating (IDR) reflecting the senior notes guarantee provided by PTL.

Fitch does not believe there will be a material impact on PTL Canada or PTL's leverage as a result of the issuance, as proceeds will be used to pay-down existing debt under the corporate revolver. PTL's leverage, as measured by debt/equity, was 3.4x as of Dec. 31, 2014.

PTL's IDR reflects its established market position in the truck leasing business, growing market share in the logistics business, operating consistency, and strong liquidity and funding profile. PTL Finance's IDR reflects its status as a wholly owned subsidiary of PTL and the nature of its operations, which are limited to serving as a pass-through issuing entity to access investors otherwise not permitted to invest in a limited partnership such as PTL.

RATING SENSITIVITIES

SENIOR UNSECURED DEBT
Given the senior note guarantee provided by PTL, the rating assigned to PTL Canada's expected unsecured debt issuance is equalized with PTL's IDR and would therefore be expected to change as a result of a change in PTL's IDR.

PTL's IDR could be adversely impacted by an increase in leverage resulting from a decline in operating performance beyond Fitch's expectations. Additionally, deterioration in the firm's competitive position, weakening 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.

Fitch believes positive rating action is limited in the medium term, but over the longer term, positive rating momentum for PTL's IDR could result from demonstrated access to the unsecured markets through market cycles, increased funding diversity, and reduced leverage.

PTL Canada is a wholly owned subsidiary of PTL. Established in 1988 and headquartered in Reading, PA, PTL is a leading provider of full-service truck leasing, truck rental, and contract maintenance and logistics services. PTL is a partnership between Penske Corporation (41.1%), GECC (29.9%), Mitsui & Co (20%), and Penske Automotive Group (9%).