Fitch Ratings has affirmed the long-term Issuer Default Rating (IDR) of GATX Corporation (GATX) at 'BBB' and the short-term IDR at 'F2'. The Rating Outlook is Stable. The affirmation reflects GATX's leading market position and expertise in the railcar leasing sector, financial profile and funding flexibility, Fitch said.

The following is excerpted the Fitch’s ratings release:

Given that freight demand is closely correlated to GDP growth, weak economic and market conditions negatively impacted lease pricing and railcar demand over the past year. The company's effort to extend the tenor of railcar leases over the past few years of peak market demand and pricing and the underlying credit quality of the customer base have helped to maintain fleet utilization and to generate relatively stable operating performance and cash flow through difficult economic conditions. Although the company's performance metrics have weakened, they remain acceptable for the rating category.

Liquidity, as defined by cash on balance sheet, revolver capacity and the company's ability to generate cash from operations, remains solid and is considered a key rating strength. Fitch believes GATX's funding profile remains balanced with sufficient capacity and flexibility to meet ongoing funding obligations and commitments through 2011. It also allows the company to remain opportunistic with respect to capital spending, portfolio acquisitions or other investment opportunities.

The Stable Outlook incorporates an expectation that the North American railcar market has begun to recover and will continue to stabilize. However, Fitch also expects GATX's operating performance will remain under pressure as near-term lease pricing is not expected to improve significantly.

While the Specialty and ASC segments have begun to show some positive trends, Rail segment performance continues to remain weak. Further weakening of operating performance and cash flow generated from the railcar portfolio due to declines in fleet utilization or lease pricing could pressure the current ratings and/or Outlook.

Other key ratings factors include leverage and debt service coverage. Fitch notes that leverage has trended slightly upward over the last three years. Fitch expects net managed debt over equity will remain near 3.5 times (x); however, a significant increase in leverage beyond these levels could represent a rating concern. Additionally, Fitch would re-evaluate ratings if there were any material deterioration in debt coverage ratios beyond current levels.

Fitch affirmed the following ratings with a Stable Outlook:

GATX Corporation

Senior unsecured debt at 'BBB'.

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