Monday, October 13, 2008


Update 6/2/09: I have a Gateway Post that contains links to my posts on this subject:Hertz Bond Information in One Post 
Anyone interested in Hertz bonds may want to check the information available about them at the Finra site: Search Results

***********original Post:

The  Trust Certificate (TC) bought today containing a senior bond from Hertz (DKR) is certainly high risk.  Fitch has this bond rated BB- currently.  That would place it in the speculative junk category just above  highly speculative junk.  Debt is over 12 billion and large chunks of it need to be refinanced over the short term.  While there can be a debate about the chances for Hertz's survival, the analyst at Morningstar gives Hertz only a 50/50 chance given the high debt level.   Recently as Ford and GM have struggled, they have sought to require the car rental companies to pay more and then the resale of those vehicles by the car rental companies in the used car market is becoming tougher.   Hertz did show revenues of over 2 billion for the June quarter and a profit of around 50 million.  It has expanded into the less cyclical non-airport locations. One recent downgrade in the common cited the weak economy. Yahoo! Finance  When Hertz released its last earnings report, it lowered guidance for the full year.  Yahoo! Finance   Economic conditions certainly have not improved since this earnings release & warning in August, and I would not be surprised by another warning before the end of this year.  A Morningstar analysis contained in a yahoo finance article suggested shorting the stock in September 2008 Yahoo! Finance  
So Morningstar is pretty negative.

I do not own and do not plan to buy the Hertz common.  I have already taken a very small chance on the senior debt contained in the TC DKR for 100 shares which I have already bought, buying the last 50 today at $6.45 ($25 par value)

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