Gatx Corp. to sell $250 mil. in debt

Gatx Corp., the Chicago-based lessor of railroad cars, plans to sell $250 million of debt due July 2016 to repay commercial paper, some of which was used to finance its fleet.

Proceeds may also be used for working capital and capital expenditures, the company said today in a regulatory filing that didn't specify the size, timing or maturity of the sale. The bonds, set to be issued as soon as today, may yield 200 basis points more than similar-maturity Treasuries, according to a person familiar with the transaction.

The commercial paper is maturing within 25 days and has an effective interest rate of about 0.45 percent as of yesterday, the company said in the filing. Gatx last issued bonds in February, selling $250 million of 4.75 percent, 5-year debt, according to data compiled by Bloomberg.

Those notes traded Nov. 5 at 109.32 cents on the dollar to yield 2.55 percent, or a spread of 148.8 basis points, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. A basis point is 0.01 percentage point.

The new debt may be rated Baa1 by Moody's Investors Service and BBB by Standard & Poor's, said the person familiar with the offering, who declined to be identified because terms aren't set.

Citigroup Inc. and Bank of America Corp. are managing the sale, according to the filing.