Avis Budget Rental Car Funding is preparing to sell $566.4 million in asset-backed securities, secured by a revolving pool of mainly non-program vehicles leased to Avis Budget Car Rental.
The issuer is a master trust known as AESOP, and Moody's Ratings points out that the notes share collateral with other outstanding series of notes.
The series 2025-1 and 2025-2 look almost identical. Avis Budget Group sponsored the special purpose vehicles (SPVs). Each which will issue the notes through four classes of A, B, C and D notes, which have almost identical ranges of credit enhancement levels, and each series has almost the same amount in each tranche.
Coupon information was not available at press time, but Fitch Ratings did note that in a change from the 2024-2 and 2024-3 series, the current issuance adds a D class, which buffers credit enhancement to the notes with subordination, according to Fitch Ratings.
Aside from subordination, the notes' credit enhancement includes a letter of credit (LOC), provided by JPMorgan Chase Bank, and dynamic overcollateralization (OC). The vehicles comprise the overcollateralization, because of a highly liquid secondary market for them. The OC rate will shift according to the fleet mix, says Fitch.
The series 2025-1 series has a legal final maturity date of August 2029, while the series 2025-2 matures two years later.
The pool is highly diversified by manufacturer, model, vehicle segment and geography, which Fitch considers a credit positive. But in recent years the pool has leaned more heavily toward non-program vehicles, the rating agency said.
Moody's points out that the leases are important to Avis Budget Car Rental business operations, and assumes a 75% probability that the company will meet its obligation to the leases.
Among the deal's credit challenges, however, is that the pool can include up to 25% of Tesla electric vehicles, and up to 5% of medium- and heavy-duty trucks, Moody's said.
Moody's assigns ratings of Aaa, A2, Baa3 and Ba1 to classes A, B, C and D on the series 2025-2, while Fitch assigns AAA, A, and BBB to classes A, B and C to series 2025-1 and 2025-2.
