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Bond Market News
Hertz Downgraded to B- by S&P
March 3, 2026
Hertz was downgraded by a notch to B- from B by S&P. Its senior secured and unsecured debt were downgraded to B- and CCC respectively. The downgrade reflects weaker than expected 2025 financial performance and slow progress in profitability recovery. Hertz’s 2025 results were hurt by elevated vehicle recalls, rental pricing pressure due to industry oversupply, volatility in used car prices, and tariff-related disruptions.
Although performance improved from 2024, the company still reported a pre-tax loss of $830mn and is expected to post another (smaller) loss in 2026. The company’s profitability initiatives are expected to yield gradual benefits, but high interest costs constrain earnings. Liquidity is expected to weaken over the next year. This is on the back of operational cash burn, fleet growth spending, a $340mn litigation settlement, and reduced revolver capacity.
While Hertz plans to raise additional financing to bolster liquidity, this will increase leverage and the interest burden. S&P expects Hertz’s leverage to remain elevated through 2027, and interest coverage is projected to remain below 1x, reflecting ongoing financial strain.
Hertz’s dollar bonds traded stable with its 12.625% 2029s at 91.9, yielding 15.8%.
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