S&P Asgns Rtg to General American Railcar Corp. III
25 October 1999
S&P Asgns Rtg to General American Railcar Corp. III
NEW YORK--Oct. 22, 1999--Standard & Poor's-- Standard and Poor's assigned its double-'A' rating to General American Railcar Corp. III 1999-1 Pass-Through Trust's 7.76% pass-through certificates, series 1999-1.As with two previous transactions, the rating is based on the stable and predictable rental cash flows generated by specialized railcars, a diversified pool of lessee railcar users, and the ability of General American Transportation Corp. (GATC; triple-'B'-plus/Negative/A-2), as manager, to release the railcars upon lease expiration or repossession. Because of the active role played by GATC, which is also owner of the issuing special-purpose entity, ratings on the certificates could be affected by material changes in GATC's credit quality.
Each certificate will represent a fractional undivided interest in General American Railcar Corp. III. The property of the trust will consist of US$107,311,000 aggregate principal amount of equipment notes to be issued on a nonrecourse basis by the owner trustee, as trustee of two separate owner trusts in connection with two separate leveraged lease transactions. Proceeds of the offering will be used to finance 75.6% of the cost of the railcars that will be purchased by each owner trust (representing the owner participants) from General American Railcar Corp. III and then leased back to General American Railcar Corp. III.
The rating on the pass-through certificates addresses only the payment of interest when due and the payment of principal on the equipment notes, which will be passed through to the certificateholders, according to the rated amortization schedule of the equipment notes and does not address payment of principal according to the scheduled amortization schedule or any other faster rate. In addition, the rating does not address the payment of any make-whole amounts, late payment premiums or interest on overdue amounts.
The equipment consists of 2,053 railroad tank cars (92%) and covered hopper cars (8%), manufactured subsequent to March 1998 by Trinity Industries Inc. Demand for these specialized railcars is fairly stable, and multiyear lease terms cushion the impact of cyclical downturns, Standard & Poor's said.--CreditWire