VTG AG

The stable outlook incorporates our expectation that VTG will sustain high fleet utilization rates while the general lease rate environment remains stable in its main geographies and end-markets over the next 12-24 months, despite macroeconomic headwinds. We expect VTG to sustain stable EBIT interest coverage in excess of 2x and debt to capital of 80%-82%, which we consider commensurate with the rating. We could downgrade VTG if its credit metrics weakened, such that EBIT interest coverage drops below 1.5x and debt to capital increases above 85%, with no signs for recovery within a reasonable timeframe. This could happen, for example, if significant parts of VTG's fleet came off lease at the same time, without clear prospects of re-leasing, or if

...VTG AG's resilient business model should continue to support business activity in 2021, despite the pandemic-induced economic slowdown and uneven recovery. We expect VTG's operating performance to remain solid in 2021 on the back of long-term contracts, stable lease rates, and marginally higher fleet utilization in rail-leasing-related business. While the company's rail segment, which accounts for around 55% of sales, remained resilient through the coronavirus pandemic, we believe that demand from VTG's project logistics business--focused primarily on the Eurasian region, including China and countries in the Commonwealth of Independent States (CIS)--will remain subdued because of the pandemic's negative impact, leading to major project delays or cancellations. At the same time, we expect that VTG's "tank-tainer" business, which focuses on leasing and the multimodal logistics of tank containers, will continue to feel the effects of an imbalance of transportation flows, international trade...

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