DBRS Confirms Hertz Vehicle Financing II LP at A (sf)

DBRS, Inc. (DBRS) has today confirmed the ratings on the variable funding notes (VFNs) issued by Hertz Vehicle Financing II LP (HVF II) as follows:

-- Series 2013-A Notes at A (sf)
-- Series 2013-B Notes at A (sf)
-- Series 2014-A Notes at A (sf)

The rating confirmations relate to the DBRS review of amendments to various transaction documents with respect to the HVF II asset-backed securities (ABS) program.

On July 3, 2014, DBRS issued a press release with respect to delays associated with Hertz Global Holdings and The Hertz Corporation (Hertz or the Company; rated BB with a Negative trend by DBRS) filing their financial statements as the Company conducted a thorough review of its financial records for the fiscal years 2011, 2012 and 2013 (see “DBRS Comments on Rental Car Finance Corp.’s Potential Amortization Event” press release). The failure to file financial statements resulted in a lease event of default and a potential amortization event with respect to certain outstanding ABS transactions issued by Hertz Vehicle Financing LLC (HVF) and Rental Car Finance Corp. (RCFC) and, as a result, the proceeds of vehicles disposed of at auction or returned to manufacturers with respect to HVF and RCFC were retained in the trust. For clarity, at no time has a lease event of default or potential amortization event occurred with respect to any HVF II series of notes.

Hertz subsequently received waivers relating to the filing of financial statements for the HVF and RCFC ABS transactions extending until year-end 2014 thereby allowing the proceeds of vehicle sales for those transactions to be invested in new vehicles. Waivers with respect to the HVF II Series 2013-A and HVF II Series 2013-B VFNs were received until November 14, 2014. On July 25, 2014, the HVF II Series 2014-A VFN was issued with a waiver relating to the filing of financial statements until November 14, 2014. Coincident with the amendments to the outstanding HVF II series, waivers relating to the filing of financial statements were received extending until June 30, 2015. In addition, the expected maturity of all HVF II series was extended until October 2016.

DBRS has maintained a dialogue with Hertz to discuss the Company’s liquidity and their ability to maintain continuity in their two ABS funding platforms. DBRS believes that the Company’s liquidity and ability to finance and service the rental fleet is consistent with the assigned ratings at this time. DBRS will continue to monitor developments to determine what, if any, impact such developments may have on DBRS-rated ABS.

Notes:
All figures are in U.S. dollars 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.