On Monday, GATX Corp. (GMT) sold $300 million senior notes, which will not be listed on any securities exchange or any public market. Citigroup Global Markets, Banc of America Securities, Mizuho Securities, PNC Capital Markets and Williams Capital Group were the joint book running managers for the sale.
Interest on these notes will be payable on April 1 and Oct. 1 every year at a 4.750% coupon rate, starting April 1, 2010. The notes, maturing on Oct. 1, 2012, would be denominated as senior unsecured debt obligations of GATX.
The company plans to use net proceeds from the sale for general corporate purposes, including potential repurchase of its common stock, capital expenditures and the repayment of commercial paper.
GATX has been able to maintain its ability to pay fixed charges. Its earnings to fixed charges ratio rose to 2.01X 2008, compared with 1.95X in 2007.
In July, the company reported operating earnings of 41 cents, down 50% year over year. We expect results to reflect effects of the global economic downturn, including pressure on lease rates, utilization and lower scrap and remarketing income. However, GATX’s leading market position, strong utilization rates and the generally strong credit quality of its portfolio will help the company over the long term.
GATX is one of the largest railcar and locomotive lessors in North America and a leasing service provider to over 1,000 customers, most of which have solid credit profiles. We maintain a Neutral recommendation on the shares.
Read the full analyst report on “GMT”
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