Fitch Ratings Affirms Interpool's Sr Secured Debt At 'BBB'; Rating Outlook Stable.

Business Editors

NEW YORK--(BUSINESS WIRE)--Dec. 20, 2002

Fitch Ratings has affirmed Interpool Inc.'s (Interpool) 'BBB' senior secured debt, 'BBB-' senior unsecured debt, and 'BB+' preferred stock ratings. The Rating Outlook is Stable. Approximately $507 million of outstanding debt securities are covered by Fitch's action.

Interpool's rating strengths center on its strong market positions in the global marine container and domestic chassis leasing businesses. Interpool's operating strategy focuses on long-term (5-8 years) leases that have historically generated stable income and consistent cash flow. Although intermodal equipment leasing by nature is a highly cyclical business, management has been successful in guiding Interpool through weak economic cycles in the past. Recently, Interpool broadened its funding options by creating a titling trust that will allow for securitization of chassis in the 144a market. Interpool is also pursuing additional unsecured capital through a rights offering of convertible debt that is expected to generate proceeds of approximately $30 million.

Interpool's strengths are tempered primarily by its rising financial leverage ratio and weak profitability for the first nine months of 2002. Profitability has been affected by several factors, including new container prices that have fallen by about 30% between December 1997 and June 2002, putting significant pressure on lease rates for used containers. Additionally, the company purchased over 20,000 chassis already on-lease at rates below those which the company normally charges, which according to management reduced the average chassis lease rate by 12%. Interpool also incurred additional one-time expenses related to the consolidation of Container Applications International, Inc. (CAI), and the implementation of a titling trust.

Nevertheless, Fitch expects Interpool's profitability to return to historic levels as container prices appear to be stabilizing and demand for chassis and containers is improving. Several markets, such as the U.S. West Coast and Southeast Asia, are facing significant equipment shortages that should benefit the company. Additionally, by implementing a titling trust, Interpool expects to save approximately $7 million in interest expense in 2003.

Interpool's tangible leverage (defined as debt plus 35% of the company's trust preferred securities plus off balance sheet obligations including operating leases, less cash divided by common equity plus 65% of the trust preferred securities less goodwill) has increased to 3.95 times (x) at Sept. 30, 2002 from 3.53x at Dec. 31, 2001. While leverage remains below the company's peak of 4.31x in December 2002, is it higher than Interpool's historical range, which has managed between 2.50x and 3.50x. Leverage increased as a result of improved global equipment demand, the consolidation of CAI, and fleet acquisition from other lessors.

Fitch views the consolidation of CAI favorably as it will increase transparency into the company's outlet for non-renewed used containers. CAI leases used containers that it owns and that are owned by other companies on a short-term basis, although it is moving towards leasing only on a managed basis. Due to the short-term nature of CAI's business, its utilization metrics tend to be volatile, and over time could lead to increased volatility of Interpool's earnings.

Tracing its roots to 1968 and based in Princeton, NJ, Interpool, Inc. through its subsidiaries is the largest lessor of domestic chassis and the third largest lessor of marine containers in the world.