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Hertz Corporation’s unsecured debt was downgraded to B- from B by Fitch. The rating action follows Fitch’s expectations of weaker recovery prospects for unsecured bondholders following its secured term loan issuance. The outlook continues to remain negative reflecting increase in Hertz’s cash flow leverage resulting from deteriorating profitability due to higher-than-expected direct operating expenses in 3Q 2023. Elevated leverage, sensitivity to global travel volumes, expected earnings variability across market cycles, and relatively high funding costs expose Hertz to heightened residual value risk they noted and these constrain the ratings.
Hertz’s dollar bonds traded slightly positive with its 5% 2029, up at 75 cents on the dollar, yielding 10.72%
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