The Avis Budget Rental Car Funding, series 2022-1 is preparing to come to market with a $400 million asset-backed securities (ABS) deal, secured by a revolving pool of Avis Budget Car Rental vehicles available for leasing.
In a change from previous transactions, particularly those preceding the 2021-2 transaction, the original equipment manufacturing (OEM) and specific state concentration limits were modified to a general limit on vehicles without liens, according to a pre-sale report from Fitch Ratings. The trust also changed the minimum depreciation rate of non-program vehicles to account for market values and an increase to the vehicle age limit.
Also, medium- and heavy-duty trucks were added to the asset base, and the fleet has an average age of 14.4 months, according to Fitch.
Barclays Capital is the structuring lead on the deal, known as AESOP 2022-1, and several entities under the Avis brand are playing other major roles on the deal, such as sponsor, servicer, lessee and administrator. Avis Rent a Car System, Budget Rent a Car, Budget Truck Rental, Zipcar and Payless comprise the sublesses on the deal, Fitch said.
Fitch noted that the fleet’s vehicle mix is diverse, with more than 15 different OEMs, and a wide range of vehicle models. Among this mix, Toyota, Ford, Chrysler, General Motors and Kia represent the top five vehicles in the pool, with ratios of 23.7%, 15.0%, 13.6%, 13.4% and 9.8%, respectively, according to Fitch.
Before the pandemic, risk vehicles totaled 99.5% of the program’s fleet. Fitch expects a shift toward non-program vehicles (NPVs), however, as manufacturers prioritize sending their limited vehicle supplies to auto dealerships over rental car companies.
The best of the fleet have credit enhancement levels of 32.2%, 22.9%, 16.6% and 4.8% on classes A, B, C and D, respectively. Worst fleet credit enhancement levels were 37.6%, 29.0%, 23.1% and 12.3% on classes A, B, C and D, respectively.
Notes will be issued through four classes of senior-subordinate notes, and Fitch intends to assign ratings of ‘AAA’ on the $288 million, class A notes to the ‘BBB’ $26 million, class D notes, the rating agency said. The underlying asset class is priced on fixed-rate loans, and the notes have no LIBOR exposure, so the deal has no LIBOR liability.
