DBRS Morningstar Changes Under Review Status on Certain Hertz Vehicle Financing II LP Securities to Under Review-Developing Implications, Maintains Under Review-Negative Implications on Class D Bonds

DBRS, Inc. (DBRS Morningstar) changed the Under Review with Negative Implications status to Under Review with Developing Implications on the following securities issued by Hertz Vehicle Financing II LP (HVF II LP):

-- Series 2013-A, Class A rated A (high) (sf)/Under Review – Developing Implications
-- Series 2013-A, Class B rated BBB (sf)/Under Review – Developing Implications
-- Series 2013-A, Class C rated B (high) (sf)/Under Review – Developing Implications
-- Series 2015-3, Class A rated AA (low) (sf)/Under Review – Developing Implications
-- Series 2015-3, Class B rated BB (high) (sf)/Under Review – Developing Implications
-- Series 2015-3, Class C rated CCC (high) (sf)/Under Review – Developing Implications
-- Series 2016-2, Class A Notes rated AA (low) (sf)/Under Review – Developing Implications
-- Series 2016-2, Class B Notes rated BB (high) (sf)/Under Review – Developing Implications
-- Series 2016-2, Class C Notes rated CCC (high) (sf)/Under Review – Developing Implications
-- Series 2016-4, Class A rated AA (low) (sf)/Under Review – Developing Implications
-- Series 2016-4, Class B rated BB (high) (sf)/Under Review – Developing Implications
-- Series 2016-4, Class C rated CCC (high) (sf)/Under Review – Developing Implications
-- Series 2017-1, Class A rated AA (low) (sf)/Under Review – Developing Implications
-- Series 2017-1, Class B rated BB (high) (sf)/Under Review – Developing Implications
-- Series 2017-1, Class C rated CCC (high) (sf)/Under Review – Developing Implications
-- Series 2017-2, Class A rated AA (low) (sf)/Under Review – Developing Implications
-- Series 2017-2, Class B rated BB (high) (sf)/Under Review – Developing Implications
-- Series 2017-2, Class C rated CCC (high) (sf)/Under Review – Developing Implications
-- Series 2018-1, Class A Notes rated AA (low) (sf)/Under Review – Developing Implications
-- Series 2018-1, Class B Notes rated BB (high) (sf)/Under Review – Developing Implications
-- Series 2018-1, Class C Notes rated CCC (high) (sf)/Under Review – Developing Implications
-- Series 2018-2, Class A rated AA (low) (sf)/Under Review – Developing Implications
-- Series 2018-2, Class B rated BB (high) (sf)/Under Review – Developing Implications
-- Series 2018-2, Class C rated B (low) (sf)/Under Review – Developing Implications
-- Series 2018-3, Class A rated AA (low) (sf)/Under Review – Developing Implications
-- Series 2018-3, Class B rated BB (high) (sf)/Under Review – Developing Implications
-- Series 2018-3, Class C rated B (low) (sf)/Under Review – Developing Implications
-- Series 2019-1, Class A rated AA (low) (sf)/Under Review – Developing Implications
-- Series 2019-1, Class B rated BB (high) (sf)/Under Review – Developing Implications
-- Series 2019-1, Class C rated CCC (high) (sf)/Under Review – Developing Implications
-- Series 2019-2, Class A Notes rated AA (low) (sf)/Under Review – Developing Implications
-- Series 2019-2, Class B Notes rated BB (high) (sf)/Under Review – Developing Implications
-- Series 2019-2, Class C Notes rated B (low) (sf)/Under Review – Developing Implications
-- Series 2019-3, Class A Notes rated AA (low) (sf)/Under Review – Developing Implications
-- Series 2019-3, Class B Notes rated BB (high) (sf)/Under Review – Developing Implications
-- Series 2019-3, Class C Notes rated B (low) (sf)/Under Review – Developing Implications

DBRS Morningstar maintained the Under Review with Negative Implications status on the following securities issued by HVF II LP:

-- Series 2013-A, Class D rated B (low) (sf)/Under Review – Negative Implications
-- Series 2016-2, Class D Notes rated CC (sf)/Under Review – Negative Implications
-- Series 2016-4, Class D rated CC (sf)/Under Review – Negative Implications
-- Series 2017-1, Class D rated CC (sf)/Under Review – Negative Implications
-- Series 2017-2, Class D rated CC (sf)/Under Review – Negative Implications
-- Series 2018-1, Class D Notes rated CC (sf)/Under Review – Negative Implications
-- Series 2018-2, Class D rated CC (sf)/Under Review – Negative Implications
-- Series 2018-3, Class D rated CC (sf)/Under Review – Negative Implications
-- Series 2019-1, Class D rated CC (sf)/Under Review – Negative Implications
-- Series 2019-2, Class D Notes rated CC (sf)/Under Review – Negative Implications
-- Series 2019-3, Class D Notes rated CC (sf)/Under Review – Negative Implications

DBRS Morningstar initially put all of the ratings on the notes issued Under Review with Negative Implications on April 29, 2020. DBRS Morningstar subsequently downgraded all of the ratings and maintained the Under Review with Negative Implications status on May 21, 2020. For more information, please refer to the April 29, 2020, press release titled “DBRS Morningstar Places Hertz Vehicle Financing II LP Securities Under Review with Negative Implications,” and to the May 21, 2020, press release titled “DBRS Morningstar Downgrades Ratings on Hertz Vehicle Financing II LP Securities, Maintains UR-Neg. Status.”

On August 19, 2020, DBRS Morningstar released a commentary titled “Hertz’s Interim Agreement with ABS Investors Provides Roadmap for Second Half of 2020.” The interim agreement discussed in the commentary provides guidance on the timing and the amount noteholders can expect regarding payments from The Hertz Corporation (Hertz) for the HVF II LP securities through December 2020. However, the actual outcome will largely depend on Hertz’s ability to carry out the terms of the interim agreement.

The continuing economic stress related to the Coronavirus Disease (COVID-19) pandemic poses significant challenges for the rental car industry. DBRS Morningstar cannot assess Hertz’s ability to execute the terms of the interim agreement and the duration and severity of the coronavirus pandemic with a high degree of certainty. DBRS Morningstar will monitor Hertz’s progress in executing the terms of the agreement to determine the impact of these actions on its current ratings.

Changing the Under Review status to Under Review with Developing Implications on certain of the notes and maintaining the Under Review with Negative Implications status for the remainder considers DBRS Morningstar’s set of macroeconomic scenarios for select economies related to the coronavirus, available in its commentary “Global Macroeconomic Scenarios: July Update,” published on July 22, 2020. DBRS Morningstar initially published macroeconomic scenarios on April 16, 2020, which were last updated on July 22, 2020, and are reflected in DBRS Morningstar’s analysis. The moderate scenario assumes some success in containment of the coronavirus within Q2 2020 and a gradual relaxation of restrictions, enabling most economies to begin a gradual economic recovery in Q3 2020.

DBRS Morningstar will seek to complete its assessment and remove the ratings from Under Review status as soon as appropriate. Upon the resolution of the Under Review with Developing Implications status, DBRS Morningstar may upgrade, confirm or downgrade the ratings on the affected classes. Upon the resolution of the Under Review with Negative Implications status, DBRS Morningstar may confirm or downgrade the ratings on the affected classes.

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework and its methodologies can be found at: https://www.dbrsmorningstar.com/research/357792.

Notes:
The principal methodology is the DBRS Morningstar Master U.S. ABS Surveillance Methodology (May 27, 2020), which can be found on dbrsmorningstar.com under Methodologies & Criteria.

For more information regarding rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/357883.

For more information regarding structured finance rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/358308.

For more information regarding the structured finance rating approach and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/359905.

The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the rating process.

For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at [email protected].

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