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Bond Market News
Hertz Bondholders Raise Concerns Over Repayment Ability
December 9, 2024
Hertz’s bondholders have raised concerns regarding the company’s ability to repay them about $320mn in unpaid interest from the company’s Covid-era bankruptcy proceedings. A lawyer representing the bondholders’ trustee noted that they fear payment delays amid ongoing financial instability. He argued that postponing payments would place the financial risk on creditors, especially with concerns about a potential second bankruptcy. He referenced Hertz’s poor financial performance, missed earnings expectations, and its issuance of junk bonds to pay off maturing debt. As a result, S&P last week warned of a potential downgrade. A federal appeals court recently ruled that Hertz must pay the interest owed. The company, however, plans to appeal this decision. Hertz’s legal team stated the company will not have to pay the bondholders until all appeals are exhausted. A company spokesperson dismissed the concerns, claiming Hertz is well-capitalized, having raised $500mn in new funding.
Hertz’s bonds were trading stable with its 4.625% 2026s at 91.75, yielding 9.29%. Its 12.625% 2029s are at 109.28, yielding 9.51%.
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