Stonepeak Taurus Decrease Holdings, higher recognized by its buying and selling identify Trac Intermodal, now has a unfavourable outlook from a key score company, even because the chassis provider’s company debt score has been affirmed .
Moody’s reduce Trac’s outlook to unfavourable on Monday, however its B2 score remained steady. The score was steady.
A B2 score is 5 notches beneath the edge between funding grade and non-investment grade debt. Moody’s describes a B2 score as “topic to excessive credit score danger.”
On the similar time, a unfavourable outlook means that there’s an elevated danger of a score downgrade within the medium time period, relying on the business definitions.
A Trac spokesperson declined to touch upon Moody’s report.
A B2 score from Moody’s (NYSE:MCO) is taken into account equal to a B score based on S&P World Scores (NYSE:SPGI). S&P has been rated B on Stonepeak/Trac since early 2022 and its outlook is steady. Moody’s B2 score has additionally been in place since January 2022.
As a result of Stonepeak/Trac is a privately held firm, Moody’s commentary on the debt score offers a uncommon, albeit restricted, perception into Trac’s funds. Ranking company studies don’t reveal revenue, loss or income knowledge, however study the corporate’s monetary well being in relation to its debt degree.
Trac was described by Moody’s as an organization that has “excessive monetary leverage, low curiosity protection, modest free money movement and a historical past of great distributions to shareholders.” Stonepeak, a personal fairness agency with investments in logistics and power amongst different sectors, acquired Trac in 2020.
Trac’s leverage quantities to roughly six instances earnings earlier than curiosity, taxes, depreciation and amortization. That determine is predicted to stay excessive, Moody’s mentioned, “as decrease chassis utilization constrains earnings and limits money movement accessible to cut back debt.”
“Regardless of sturdy U.S. container import volumes in 2024, TRAC’s operational efficiency weakened as lowered chassis downtime lowered utilization,” Moody’s mentioned in its report. “We anticipate chassis utilization to enhance barely in 2025, however uncertainty round tariffs poses a danger to import quantity development. »
This level on dwell time got here up a second time within the report. Whereas U.S. container imports elevated within the first 9 months of the yr – Moody’s estimates that development at 15% – “TRAC’s income declined as lowered dwell instances greater than offset any enhance in quantity or worth,” the score company mentioned.
Chassis utilization is predicted to extend this yr, however given the uncertainty surrounding charges, Moody’s mentioned, “we anticipate TRAC operational efficiency to enhance solely modestly in 2025.”
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