GATX – CDS 181bps, Base Case iCDS 165bps, Negative Case iCDS 181bps, 2026 3.250% Bond YTW of 1.695%, iYTW of 2.525%, Baa2 Rating from Moody’s, HY2 (equivalent to B2) Rating from Valens, High Refinancing Need

• Cash bond markets are understating credit risk, with a YTW of 1.695%, relative to an Intrinsic YTW of 2.525%. Furthermore, Moody’s is materially understating the firm’s fundamental credit risk, with its Baa2 credit rating six notches higher than Valens’ HY2 (B2) credit rating
  
• Incentives Dictate Behavior™ analysis highlights that management’s compensation framework does not punish management for overleveraging the balance sheet or over-spending on assets, potentially limiting cash available for servicing debt
  
• Earnings Call Forensics™ of the firm’s Q4 2020 earnings call (01/28) highlights that management may have concerns about expected declines in lease revenue, asset disposition income in their Rail North America, and reduced profits from their India joint venture. In addition, they may have concerns about the sustainability of renewed remarketing package interest among their investor base, manufacturing shutdowns in India, and the persistence of high scrap rates. Furthermore, they may be overstating the potential of their Trifleet acquisition and the attractiveness of their lease investments