Moody's Lowers Outlook On GATX To 'negative'

NEW YORK (AP) — Moody's Investors Service on Friday lowered its rating outlook on GATX Corp. to "negative" from "stable," saying the recession could further weaken the company's railcar-leasing business.

Moody's, however, affirmed GATX's long-term rating of Baa1 and its Prime-2 short-term ratings.

Softer demand for railcars has translated into less usage and lower lease rates, crimping GATX's revenue.

Moody's said GATX could suffer more than in prior downturns, and that it expects weaker results from the company's specialty finance and Great Lakes shipping businesses.

GATX has stretched average railcar lease terms in recent years, leaving fewer cars subject to lease renewal now. But Moody's said it's worried that the length and severity of the downturn and the potential for a slow recovery could reduce GATX's utilization rates and revenues for a long period.

Moody's said GATX is also dealing with higher borrowing costs because of the tight credit market.

Moody's said GATX has acquired rail assets at good prices in previous downturns, but is limited this time by the need to preserve cash and leverage that is higher than some competitors. The agency said that if GATX makes acquisitions funded by debt, it could review the company's ratings.