S&P Lowers Hertz, Dollar Thrifty Credit Ratings

On April 2, Standard & Poor’s (S&P) lowered Dollar Thrifty Automotive Group’s (DTAG) credit rating. According to S&P, DTAG’s long-term credit rating was downgraded from CCC+ to CCC, with the outlook being negative.

The ratings agency also addressed concerns with Dollar Thrifty’s exposure to Chrysler, which is currently facing its on financial trouble.

Additionally, S&P has taken into account DTAG’s efforts to reduce its debt maturities. “We expect Dollar Thrifty to pay remaining debt maturities of around $300 million in 2009 and around $500 in 2010 with anticipated FFO of at least $500 million a year and proceeds from the disposition of vehicles,” noted S&P. “However, we are concerned about the company's ability to refinance a significant portion of the approximate $500 million of ABS debt that matures in 2010. These maturities are primarily related to vehicle-backed secured debt that Dollar Thrifty will have difficulty refinancing in the current credit environment. The company will need to find replacement capital to fund new vehicle acquisitions in 2010 to meet growth demand as the economy recovers and to replace aging vehicles.”

Also last week, S&P lowered Hertz's long-term corporate credit rating two notches. However, on news it has agreed to pay $33 million to buy assets of Advantage Rent A Car, Hertz Global Holding's stock increased 11.7 percent last week, or 48 cents to $4.70.

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