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Element Receives Investment-Grade BBB Rating from S&P, Opening Access to Key U.S. Market

November 04, 2019, 07:10 AM
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Element Fleet Management Corp. announced Standard & Poor’s (S&P) has initiated coverage of the company with an investment-grade BBB rating and stable outlook. Element is pleased with this outcome as it represents a significant step towards further strengthening and de-risking the company’s investment-grade balance sheet by opening access to the U.S. unsecured corporate debt market.

The S&P investment-grade rating is a product of the company’s ongoing client-centric transformation, which has rapidly improved tangible leverage, profitability and free cash flow results over the past year.

S&P’s BBB rating represents Element’s second investment-grade rating from a U.S. credit rating agency that is a prerequisite for the company to further its stated objective of issuing bonds in the U.S. unsecured corporate debt market in the first half of 2020. Last month, credit rating agency Fitch affirmed its BBB+ investment-grade rating and improved its outlook for the company.

Earlier this month, credit rating agencies DBRS and Kroll also affirmed their stable outlooks and investment-grade ratings for Element: BBB (high) and A-, respectively. The U.S. unsecured corporate debt market is the most liquid and reliable of its kind in the world. Access to this market will diversify Element’s funding sources and enable the Company to mature its capital structure by replacing the convertible debentures due in June 2020 with unsecured bonds. Medium- to long-term, Element believes the programmatic issuance of U.S. corporate bonds will meaningfully lower its overall cost of financing.

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