Germany-Based Daimler Truck Senior Notes Rated 'BBB+' (Preliminary)
MILAN (S&P Global Ratings) Dec. 1, 2021--S&P Global Ratings today said it assigned its preliminary 'BBB+' long-term issue rating to the proposed senior unsecured notes that will be issued by two financing subsidiaries of Daimler Truck Holding AG: Daimler Trucks Finance Canada Inc. and Daimler Trucks Finance North America LLC.
We understand that the proposed notes for the U.S. market will be divided into various tranches either fixed- or floating-rate format. In the Canadian market, Daimler Truck aims to raise notes into tranches, also either fixed- or floating-rate.
The rating is in line with our preliminary issuer credit ratings on Daimler Truck Holding AG and wholly owned subsidiary Daimler Truck AG (for more information, see "Germany-Based Truck OEM Daimler Truck Holding AG, Subsidiary Daimler Truck AG Rated 'BBB+/A-2' (Preliminary)," published Oct. 28, 2021, on RatingsDirect) because the level of debt is low and we assess that there are no material elements of subordination in the capital structure.
We understand that the bond proceeds will fund the acquisition of the financial service portfolio based in the U.S. and Canada. The notes are subject to customary negative covenants such as the negative pledge.
Daimler Truck Holding AG and Daimler Truck AG will each guarantee the due and punctual payment amounts the issuers will pay on the notes. We also understand that there will be an upstream guarantee from Daimler Truck AG to Daimler Truck Holding AG, to equalize all interests. We do not anticipate at this stage that Daimler Truck AG or Daimler Truck Holding AG will issue debt. Therefore, the financing entities issuing debt for the group, namely Daimler Truck International Finance AG, Daimler Trucks Finance North America LLC, and Daimler Trucks Finance Canada Inc., will be indirectly owned by Daimler Truck AG.
The final rating will depend on our receipt and satisfactory review of all final transaction documentation. This includes the final offering memoranda, the final IPO prospectus, and demerger and final capital structure and continued operating performance in line with our base-case scenario. Accordingly, the preliminary rating should not be construed as evidence of the final rating. If S&P Global Ratings does not receive final documentation within a reasonable time frame, final documentation departs from materials reviewed, or there are unexpected material deviations from the expectations for the company's operating performance, it reserves the right to withdraw or revise the ratings. Potential changes include use of the new loan proceeds, cash at IPO date netted by one-off occurrences, conditions of the instruments, and similar factors.
Related Criteria
- General Criteria: Environmental, Social, And Governance Principles In Credit Ratings, Oct. 10, 2021
- General Criteria: Group Rating Methodology, July 1, 2019
- Criteria | Corporates | General: Corporate Methodology: Ratios And Adjustments, April 1, 2019
- Criteria | Corporates | General: Reflecting Subordination Risk In Corporate Issue Ratings, March 28, 2018
- General Criteria: Methodology For Linking Long-Term And Short-Term Ratings, April 7, 2017
- Criteria | Corporates | General: Methodology: The Impact Of Captive Finance Operations On Nonfinancial Corporate Issuers, Dec. 14, 2015
- Criteria | Corporates | General: Methodology And Assumptions: Liquidity Descriptors For Global Corporate Issuers, Dec. 16, 2014
- General Criteria: Country Risk Assessment Methodology And Assumptions, Nov. 19, 2013
- Criteria | Corporates | General: Corporate Methodology, Nov. 19, 2013
- General Criteria: Methodology: Industry Risk, Nov. 19, 2013
- General Criteria: Methodology: Management And Governance Credit Factors For Corporate Entities, Nov. 13, 2012
- General Criteria: Principles Of Credit Ratings, Feb. 16, 2011
Related Research
- Germany-Based Truck OEM Daimler Truck Holding AG, Subsidiary Daimler Truck AG Rated 'BBB+/A-2' (Preliminary), Oct. 28, 2021
- Research Update: Automaker Daimler Upgraded To 'A-' As Strong Cash Flows Fund Accelerating Electric Vehicle Transition; Outlook Stable, July 27, 2021
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