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Bond Market News
Hertz Downgraded to B by S&P; Raises
June 21, 2024
Hertz Global Holdings was downgraded by a notch to B from B+ by S&P. The rating agency also lowered ratings on senior secured credit facilities of its major operating subsidiary, The Hertz Corp to BB- from BB. The downgrade follows the 5Y $750mn first lien bond issuance by the company, priced at 12.625% yesterday. The deal was upsized from $500mn earlier. Hertz is planning to use the proceeds from the issuance to repay its existing revolving credit facilities. While the proposed issuance will improve Hertz’s liquidity in the near term, the higher debt and interest expenses will result in weaker credit metrics through 2025, according to S&P.
Hertz’s bonds traded weaker yesterday with its 5% 2029s at 58, yielding 17.2%.
Separately, Hertz raised $750mn via a 5NC3 first lien bond at a yield of 12.625%, 12.5bp inside initial guidance of 12.75% area. The bonds are rated Ba3/BB-/BB-. Proceeds will be used to pay down a portion of its $2bn committed revolving credit facility and for improving liquidity.
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