Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Already a customer?
LOG IN
Don't want to see this again?
REGISTER
Accept our to continue to Moodys.com:
PLEASE READ
AND SCROLL DOWN!
By clicking “I AGREE” [at the end of this document],
you indicate that you understand and intend these terms and conditions to be
the legal equivalent of a signed, written contract and equally binding, and
that you accept such terms and conditions as a condition of viewing any and all
Moody’s information that becomes accessible to you [after clicking “I AGREE”] (the
“Information”). References herein to “Moody’s” include Moody’s
Corporation, Inc. and each of its subsidiaries and affiliates.
Terms of One-Time Website Use
1. Unless
you have entered into an express written contract with Moody’s to the contrary,
you agree that you have no right to use the Information in a commercial or
public setting and no right to copy it, save it, print it, sell it, or publish
or distribute any portion of it in any form.
2. You
acknowledge and agree that Moody’s credit ratings: (i) are current opinions of
the future relative creditworthiness of securities and address no other risk; and
(ii) are not statements of current
or historical fact or recommendations to purchase, hold or sell particular
securities. Moody’s credit ratings and
publications are not intended for retail investors, and it would be reckless
and inappropriate for retail investors to use Moody’s credit ratings and
publications when making an investment decision. No
warranty, express or implied, as the accuracy, timeliness, completeness,
merchantability or fitness for any particular purpose of any Moody’s credit
rating is given or made by Moody’s in any form whatsoever.
3. To the extent permitted by law, Moody’s and its directors,
officers, employees, representatives, licensors and suppliers disclaim
liability for: (i) any indirect, special, consequential, or incidental losses
or damages whatsoever arising from or in connection with use of the
Information; and (ii) any direct or compensatory damages caused to any person
or entity, including but not limited to by any negligence (but excluding fraud
or any other type of liability that by law cannot be excluded) on the part of
Moody’s or any of its directors, officers, employees, agents, representatives,
licensors or suppliers, arising from or in connection with use of the
Information.
4. You agree to read [and
be bound by] the more detailed disclosures regarding Moody’s ratings and the
limitations of Moody’s liability included in the Information.
5. You agree that any disputes relating to this agreement or your use of
the Information, whether sounding in contract, tort, statute or otherwise,
shall be governed by the laws of the State of New York and shall be subject to
the exclusive jurisdiction of the courts of the State of New York located in
the City and County of New York, Borough of Manhattan.
I AGREE
22 Apr 2011
New York, April 22, 2011 -- Moody's has placed on review for possible upgrade two series of rental
car asset backed notes issued by Rental Car Finance Corp.,
a special purpose entity owned by Dollar Thrifty Automotive Group,
Inc. (Dollar Thrifty, B2 positive). This is prompted
by an upgrade in the corporate rating of the sponsor to B2, outlook
positive, from B3, outlook positive, on April 19,
2011.
COMPLETE RATING ACTIONS:
Issuer: Rental Car Finance Corp.
Series Description: Series 2006-1 Rental Car Asset-Backed
Notes
Class Description: Class A
Current Rating: Ba1 Placed Under Review for Possible Upgrade;
previously on April 29, 2010 upgraded to Ba1
Underlying Rating: Ba1 Placed Under Review for Possible Upgrade;
previously on April 29, 2010 upgraded to Ba1
Financial Guarantor: Ambac Assurance Corporation (NR; rating
withdrawn on April 7, 2011)
Series Description: Series 2007-1 Rental Car Asset-Backed
Notes
Class Description: Class A
Current Rating: Ba2 Placed Under Review for Possible Upgrade;
previously on April 29, 2010 upgraded to Ba2
Underlying Rating: Ba2 Placed Under Review for Possible Upgrade;
previously on April 29, 2010 upgraded to Ba2
Financial Guarantor: Financial Guaranty Insurance Company (NR;
rating withdrawn on March 29, 2009)
The actions are motivated primarily by the strengthening credit profiles
of Dollar Thrifty as the sponsor, master servicer and the directly-owned
DTG Operations, Inc. as the lessee, as reflected by
the upgrade of its rating to B2, positive from B3, positive.
The probability of default of the sponsor, while only one of several
important variables which drive our ratings of rental car asset-backed
securities, is the single most important factor. The principal
methodology used in rating the transactions is described below.
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.
In addition, Moody's publishes a weekly summary of structured finance
credit, ratings and methodologies, available to all registered
users of its website, at www.moodys.com/SFQuickCheck.
Separately, we note that following the termination of Dollar Thrifty's
merger agreement with Hertz Global Holdings, Inc. (Hertz)
last year after Dollar Thrifty did not obtain the requisite votes to execute
its definitive merger agreement with Hertz at the special meeting of shareholders
held on September 30, 2010, Dollar Thrifty and Avis Budget
have been cooperating to pursue antitrust regulatory clearance of a potential
acquisition of Dollar Thrifty's common stock by Avis Budget. Moody's
views the potential acquisition as neutral to credit positive to Dollar
Thrifty-sponsored ABS. Given the uncertainties concerning
the completion of the acquisition, such as the outcome of FTC approval,
Moody's will take ratings actions if the transaction comes to fruition,
depending on its ultimate impact on the Dollar Thrifty-sponsored
ABS.
PRINCIPAL RATING METHODOLOGY
The primary asset backing the notes is the monthly lease payments owed
by DTG Operations, Inc., and guaranteed by the sponsor
under an operating lease, as well as a pool of vehicles comprising
the bulk of the sponsor's daily rental car fleet, including both
program vehicles (acquired vehicles subject to repurchase, or guaranteed
a minimum depreciation or resale value, by the related auto manufacturer
at pre-set prices) and non-program vehicles (acquired vehicles
that do not benefit from such repurchase or guaranteed depreciation agreements).
The vehicles are owned by a bankruptcy-remote entity, referred
to as the lessor, which may also be the issuer or be an affiliate
of the issuer. The sponsor and/or operating affiliates act as lessees.
For quantitative analysis Moody's uses a monte carlo simulation model
which simulates the potential cash flows from the vehicle assets and any
additional credit enhancements and the rated obligation repayment requirements.
The key factors in Moody's rating analysis include the probability of
default of the sponsor, the likelihood of a bankruptcy or default
by the auto manufacturers providing vehicles to the rental car fleet owned
by the lessor, and the recovery rate on the rental car fleet in
case the rental car sponsor defaults. Monte Carlo simulation modeling
was used to assess the impact on bondholders of these variables.
The default probability of the sponsor is simulated based on its current
corporate probability of default rating and Moody's idealized default
rates. For surveillance purposes, in the event that an upgrade
above the initial rating is being considered, we stress the rating
of the sponsor as lessee to provide a limited degree of de-linkage
of the rated ABS from the corporate rating of the sponsor, otherwise,
the current rating of the sponsor is used.
All of the sponsoring rental car companies fleets include both program
vehicles and non-program vehicles (also known as 'risk' vehicles).
Under the terms of the simulation, in cases where the related sponsor
does not default it is assumed that bondholders are repaid in full and
no liquidation of the lessor's rental car fleet is necessary. In
cases where the sponsor does default, the lessor's fleet must be
liquidated in order to repay their secured loans to the Issuer,
and ultimately the bondholders. In those cases, the default
probability of the related manufacturers must also be simulated.
Due to Chrysler's, Ford's and GM's high concentrations in the pool
and non-investment grade ratings or non-ratings, as
applicable, their defaults were simulated based on estimates for
probability of default provided by Moody's corporate analysts.
These default estimates differentiate between default with continued operation
and default with cessation of operations. The default probability
of the other manufacturers is derived from their respective ratings.
For each manufacturer simulated to be in Chapter 11, we further
simulate whether each such manufacturer will honor its obligation with
respect to program vehicles or default on that obligation.
In simulating liquidation of the rental car fleet following a sponsor
default, it is assumed that the portion of the program vehicle fleet
associated with non-defaulting manufacturers (both non-bankrupt
manufacturers and bankrupt Chapter 11 manufacturers honoring their program
obligations) is returned to the related manufacturer at full book value.
For the non-program (risk) fleet, as well as the portion
of the program fleet associated with defaulting manufacturers not honoring
obligations on their program vehicles, it is assumed the vehicles
will be sold in the open market. For vehicles sold in the open
market, the market value of a vehicle at time of liquidation before
any haircuts are applied is estimated using market depreciation data from
the National Automobile Dealers Association (NADA) for each manufacturer
with vehicles in the collateral pool. In making this calculation
we generally assume a purchase price for program and non-program
(risk) vehicles which is 10% below MSRP, to give credit to
the volume discounts typically achieved by rental car companies.
However, in the case of rental car ABS sponsored by Avis Budget,
we assume the discount for non-program (risk) vehicles is 15%
to reflect both the terms required under the transaction documentation
and historic performance. In addition, we assume a delay
in sale of six months and therefore net an additional six months of depreciation.
This six month delay in fleet liquidation following the sponsor's default
contemplates potential legal challenges to obtaining control of the fleet
and the potential difficulties of marshaling and selling such a large
quantity of vehicles. The base liquidation value of sold vehicles
is determined by applying a base haircut to this estimated depreciated
market value. The base haircut is simulated using a triangular
distribution (i.e., minimum, mode, maximum)
with values of (5%, 15%, 30%).
The resulting calculation provides the base liquidation value.
Additional haircuts may be applied to the base liquidation value depending
on the manufacturer's simulated status: non-bankrupt,
bankrupt Chapter 11 or bankrupt Chapter 7. No further haircuts
are applied to either (i) non-program (risk) and program vehicles
from non-bankrupt manufacturers or (ii) program vehicles from bankrupt
Chapter 11 manufacturers who are assumed to honor their program obligations.
However, in all other cases, the base liquidation value is
further reduced. For bankrupt Chapter 11 manufacturers, we
reduce the base liquidation of their non-program (risk) vehicles
and their program vehicles whose obligations are assumed not to be honored
by multiplying the base liquidation value by a haircut, which is
simulated using a triangular distribution with input parameters (14%,
18%, 19%). For manufacturers assumed to be
in Chapter 7, we reduce base liquidation value of their vehicles
by multiplying the base liquidation value by a haircut, which is
simulated using a triangular distribution with input parameters (25%,
35%, 50%).
With respect to transaction maturity, for analytical purposes Moody's
is assigning each transaction to one of three assumed maturity buckets
based on its actual remaining expected maturity. If the remaining
expected maturity is less than 18 months, a remaining maturity of
12 months will be assumed. If the remaining expected maturity is
18 months or more but less than 37 months, 24 months will the input
to the model. If the remaining expected maturity is 37 months or
more, 60 months will be assumed. This is a method of quantifying
our view that there is greater uncertainty regarding fleet mix by manufacturer
for transactions with longer terms than for those with shorter terms.
Moody's Investors Service did not receive or take into account a third
party due diligence report on the underlying assets or financial instruments
related to the monitoring of this transaction in the past six months.
ADDITIONAL RESEARCH
Reports for the above transactions and other transactions and the special
reports, "Updated Report on V Scores and Parameter Sensitivities
for Structured Finance Securities" and "V Scores and Parameter Sensitivities
in the U.S. Vehicle ABS Sector" are available on moodys.com.
New York
Xiaochao Wang
Vice President - Senior Analyst
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
New York
Michael McDermitt
VP - Senior Credit Officer
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's Investors Service
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's places Dollar Thrifty-sponsored rental car asset backed securities on review for possible upgrade
No Related Data.
© 2019 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.
CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MOODY’S PUBLICATIONS MAY INCLUDE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY’S OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. CREDIT RATINGS AND MOODY’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.
MOODY’S CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS OR MOODY’S PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.
ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.
CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.
All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit 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 or in preparing the Moody’s publications.
To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.
To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.
NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.
Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any rating, agreed to pay to Moody’s Investors Service, Inc. for ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and MIS also maintain policies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”
Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.
Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.
MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.
MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.
|
|
