Approximately $2.2 billion of asset-backed securities affected
New York, October 25, 2012 -- Moody's Investors Service announced today that, as a result of amendments
included in the Second Amended and Restated Series 2009-1 Supplement,
executed with investor consent, relating to the Series 2009-1
Variable Funding Rental Car Asset Backed Notes (the VFN) issued by Hertz
Vehicle Financing LLC (Issuer), it has downgraded the VFN to A2
(sf) from Aaa (sf). Moody's previously on 10 December 2010 upgraded
the VFN rating to Aaa (sf) from the original rating of Aa1 (sf).
The Issuer is a special purpose entity wholly owned by The Hertz Corporation
(Hertz, B1/ Stable outlook). The key changes implemented
by the Second Amended and Restated Series 2009-1 Supplement (the
Amended Supplement), executed on 25 October 2012, were reductions
in the amount of credit enhancement available to noteholders, as
well as the extension of the Expected Final Payment Date and Legal Final
Payment Date to 25 March 2014 and 25 March 2015, respectively.
Moody's also announced today that the execution of the Amended Supplement,
in and of itself, will not result in a reduction, withdrawal,
or placement under review for possible downgrade of the ratings currently
assigned to the Other Existing Notes (defined below) at this time.
Moody's rates the following Issuer's transactions: the Series 2009-2
Notes, the Series 2010-1 Notes, and the Series 2011-1
Notes (collectively the Other Existing Notes). Because credit enhancement
and maturity dates vary from series to series, a reduction in credit
enhancement or a change in maturity for one series of notes does not affect
the structural protections afforded to the other series of notes.
As such, Moody's believed that the execution of the Amended Supplement
did not have an adverse effect on the credit quality of the Other Existing
Notes such that the Moody's ratings were impacted. Moody's did
not express an opinion as to whether the Amendment could have other,
non-credit-related effects.
The complete rating action is as follows:
Issuer: Hertz Vehicle Financing LLC
$2,238,832,384 (maximum amount) Series 2009-1
Variable Funding Rental Car Asset Backed Notes, downgraded to A2
(sf); previously on 10 December 2010 upgraded to Aaa (sf)
RATINGS RATIONALE
The downgrade is the direct result of the terms of the Amended Supplement,
which reduces the amount of credit enhancement available to noteholders.
The required minimum credit enhancement for the VFN is dynamic and,
as changed by the Amended Supplement, is equal to the sum of (1)
25.0% for vehicles subject to a guaranteed depreciation
or repurchase program from eligible manufacturers (program vehicles) rated
at least Baa2 (unlimited) or Baa3 (subject to a limit of 10% of
the total securitized fleet by net book value); (2) 29.0%
(previously 48.0%) for all other program vehicles;
and (3) 35.5% (previously 49.0%) for non-program
(risk) vehicles and vehicles of bankrupt manufacturers; in each case,
as a percentage of the outstanding note balance. The required total
enhancement includes a minimum portion which is liquid (in cash and/or
Letter of Credit), sized as a percentage of the outstanding note
balance, rather than fleet vehicles. For this transaction,
the minimum liquidity requirement is 3.00% (previously 4.45%)
of the VFN's outstanding balance and may be funded once commitments under
the facility are drawn. The actual required amount of credit enhancement
therefore fluctuates based on the mix of vehicles in the securitized fleet.
The rating for the VFN is based on, among other things, the
credit quality of Hertz as the lessee, the liquidation values of
the vehicles in the rental car fleet, the credit quality of automobile
manufacturers providing vehicle disposition program agreements for program
vehicles, the experience of Hertz as the servicer of the rental
car fleet and the administrator for the Issuer, and the available
credit support provided by a combination of overcollateralization,
cash and/or Letters of Credit (LOCs). The VFN was issued under
a master indenture and ranks pari passu with the Issuer's other outstanding
series of notes sharing in the same collateral.
The primary asset backing the notes is the monthly lease payments by Hertz
as well as the pool of vehicles comprising the bulk of the Hertz daily
rental car fleet, including both program vehicles (vehicles subject
to repurchase, or guaranteed depreciation agreements provided by
the related auto manufacturer) and non-program vehicles (vehicles
that do not benefit from such repurchase or guaranteed depreciation agreements).
The VFN was sold in a privately negotiated transaction without registration
under the Securities Act of 1933 (the Act) under circumstances reasonably
designed to preclude a distribution thereof in violation of the Act.
PRINCIPAL RATING METHODOLOGY
The principal methodology used in this rating was "Moody's Global Approach
to Rating Rental Car ABS and Rental Truck ABS," published in July
2011. Please see the Credit Policy page on www.moodys.com
for a copy of this methodology.
Other methodologies and factors that may have been considered in the process
of rating this issue can also be found in the Research & Ratings directory,
in the Rating Methodologies sub-directory on www.moodys.com
REGULATORY DISCLOSURES
The Global Scale Credit Ratings on this press release that are issued
by one of Moody's affiliates outside the EU are endorsed by Moody's
Investors Service Ltd., One Canada Square, Canary Wharf,
London E 14 5FA, UK, in accordance with Art.4 paragraph
3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies.
Further information on the EU endorsement status and on the Moody's
office that has issued a particular Credit Rating is available on www.moodys.com
For ratings issued on a program, series or category/class of debt,
this announcement provides relevant regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides relevant regulatory disclosures in relation
to the rating action on the support provider and in relation to each particular
rating action for securities that derive their credit ratings from the
support provider's credit rating. For provisional ratings,
this announcement provides relevant regulatory disclosures in relation
to the provisional rating assigned, and in relation to a definitive
rating that may be assigned subsequent to the final issuance of the debt,
in each case where the transaction structure and terms have not changed
prior to the assignment of the definitive rating in a manner that would
have affected the rating. For further information please see the
ratings tab on the issuer/entity page for the respective issuer on www.moodys.com
Information sources used to prepare the rating are the following:
parties involved in the ratings, parties not involved in the ratings,
public information, confidential and proprietary Moody's Investors
Service information.
Moody's did not receive or take into account a third-party
assessment on the due diligence performed regarding the underlying assets
or financial instruments related to the monitoring of this transaction
in the past six months.
Moody's considers the quality of information available on the rated
entity, obligation or credit satisfactory for the purposes of issuing
a rating.
Moody's adopts all necessary measures so that the information it
uses in assigning a rating is of sufficient quality and from sources Moody's
considers to be reliable including, when appropriate, independent
third-party sources. However, Moody's is not
an auditor and cannot in every instance independently verify or validate
information received in the rating process.
Please see the ratings disclosure page on www.moodys.com
for general disclosure on potential conflicts of interests.
Please see the ratings disclosure page on www.moodys.com
for information on (A) MCO's major shareholders (above 5%) and
for (B) further information regarding certain affiliations that may exist
between directors of MCO and rated entities as well as (C) the names of
entities that hold ratings from MIS that have also publicly reported to
the SEC an ownership interest in MCO of more than 5%. A
member of the board of directors of this rated entity may also be a member
of the board of directors of a shareholder of Moody's Corporation;
however, Moody's has not independently verified this matter.
Please see Moody's Rating Symbols and Definitions on the Rating Process
page on www.moodys.com for further information on the meaning
of each rating category and the definition of default and recovery.
Please see ratings tab on the issuer/entity page on www.moodys.com
for the last rating action and the rating history.
The date on which some ratings were first released goes back to a time
before Moody's ratings were fully digitized and accurate data may not
be available. Consequently, Moody's provides a date that
it believes is the most reliable and accurate based on the information
that is available to it. Please see the ratings disclosure page
on our website www.moodys.com for further information.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Gregory J. Gemson
Asst Vice President - Analyst
Structured Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Michael McDermitt
VP - Senior Credit Officer
Structured Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's downgrades Hertz Series 2009-1 Rental Car ABS following amendment
