DBRS Assigns Ratings to Hertz Vehicle Financing II LP Series 2013-A and Series 2013-B VFNs

DBRS, Inc. (“DBRS”) has today assigned ratings to two Series of VFNs issued by Hertz Vehicle Financing II LP.

• Series 2013-A VFN’s rated ‘A’ (sf)
• Series 2013-B VFN’s rated ‘A’ (sf)

The DBRS analysis of the present transaction incorporated several analytical changes relative the approach taken for prior rental car transactions as noted below.

• While manufacturer program receivables from non-investment grade manufacturers have typically been excluded from the borrowing base, in the present transaction, non-investment grade receivables are included with the related risks mitigated by structural features relating to ratings thresholds, aging limits, and limitations relative to the overall borrowing base.
• DBRS analysis has typically utilized a single depreciation rate during a liquidation scenario. In the present transaction, DBRS utilized discrete depreciation rates during each of the stay and liquidation periods to better reflect the change in depreciation profile for vehicles that are on rent and incurring mileage (stay period), from those that are not. This is consistent with assumptions relating to rejection of the lease and the subsequent disposal of the vehicles during the liquidation period.
• DBRS has generally assumed a liquidation horizon that assumed vehicle disposals were heavily concentrated towards the end of the liquidation period. For the present transaction, DBRS assumed a more orderly liquidation profile to better reflect the expected disposition scheme during the liquidation period. This approach to stay and liquidation periods remains consistent with the liquidation horizons published in the DBRS “Rating U.S. Rental Car Securitizations” methodology.
• Consistent with analysis of prior rental car transactions and with DBRS published methodology, DBRS considers the impact of vehicles that become casualties. However, in the present transaction, the analysis of casualty vehicles focused on the casualty experience solely during the stay period, where in prior transactions DBRS considered the casualty experience for an entire model year. DBRS believes this approach better reflects expectations under stress and more accurately aligns the transaction’s potential exposure window to vehicles that become casualties.

Notes:
All figures are in USD unless otherwise noted.

The applicable methodology is Rating U.S. Rental Car Securitizations, which can be found on our website under Methodologies.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.