DBRS Morningstar Assigns New Long-Term Senior Debt Rating to EFN, BBB (high), Stable

DBRS, Inc. (DBRS) assigned a Long-Term Senior Debt rating of BBB (high) with a Stable trend to Element Fleet Management Corp. (EFN or the Company). The Intrinsic Assessment (IA) for the Company is BBB (high), while its Support Assessment remains SA3. As a result, EFN’s ratings are equalized with its IA.

RATING DRIVERS
Given the Coronavirus Disease (COVID-19) related headwinds, should the current economic downturn lead to material and sustained pressure on the Company’s bottom line, or a sustained period of weakening credit performance, ratings could be negatively pressured. The failure to successfully complete the execution of the transformation plan resulting in lower than anticipated targeted profitability, or elevated tangible leverage above 8.0x could result in negative rating pressure. Conversely, a strengthened capital position and improved funding diversity accompanied by lower asset encumbrance, could have positive ratings implications. Additionally, further success in executing the transformation plan resulting in a sustained improvement in profitability, while maintaining sound credit and asset performance would be viewed positively.

Notes:
The principal methodology is Global Methodology for Rating Non-Bank Financial Institutions (September 24, 2019): https://www.dbrsmorningstar.com/research/350802/global-methodology-for-rating-non-bank-financial-institutions.

For more information regarding rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/357883.

The primary sources of information used for this rating include Company Documents. DBRS Morningstar considers the information available to it for the purposes of providing this rating was of satisfactory quality.

The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

Generally, the conditions that lead to the assignment of a Negative or Positive trend are resolved within a 12-month period. DBRS Morningstar’s outlooks and ratings are under regular surveillance.

For more information on this credit or on this industry, visit www.dbrs.com.

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