Element Financial received an initial issuer rating of BBB from DBRS and was also awarded a rating of R-2 (middle) on its short-term instruments and a rating of Pfd-3 on its perpetual preferred shares.

All three ratings were issued with a stable outlook. Despite the R-2 rating, Element said it does not plan to access the short-term debt market for its funding requirements.

“I was pleased that DBRS cited our leading position in North American fleet management, our better than average credit risk profile and our strengthening earnings profile as key considerations in determining these ratings,” said Steven Hudson, Element’s CEO. “Their report also noted that over the medium-term, these assigned ratings could be positively impacted by further earnings expansion while our credit costs remain within historical levels and our operating efficiency improves,” added Mr. Hudson.

On August 24, 2015, Element entered into a credit agreement with a syndicate of 24 lenders that provides the company with an expanded $8.5 billion senior secured three-year credit facility. Concurrent with the receipt of this initial issuer rating from DBRS, the interest rate applicable to the facility will be reduced by 35 basis points on top of the 20 basis point reduction that came into effect when Element closed the US portion of the acquisition of GE Capital’s fleet management business on August 31, 2015

“These reductions in Element’s borrowing costs are an important deliverable in achieving the $90 million to $95 million annualized cost savings that we have targeted from the integration of the acquired GE fleet operations,” said Hudson.