When it comes to Hertz Corp.'s $4 billion in notes backed by rental car fleet leases -Hertz Vehicle Financing LLC, Series 2005-1 and 2005-2 - it is not only sheer size that sets the transaction apart from other deals. They also changed the way market participants view the role of securitization in leveraged buyout transactions. Also noteworthy is the sheer size of the two pieces - which combined make up the largest rental car transaction ever done. The volume brought enormous year-end liquidity to the ABS market and, from all accounts, the notes were well received by investors. For these reasons, ASR has chosen the Hertz transaction as the U.S. ABS Deal of the Year for 2005.
Richard D'Albert, managing director and co-head of the global securitized product group at Deutsche Bank Securities, said that a significant contribution of the Hertz deal is the broader acceptance of structured finance, particularly securitization, as a cost-effective means of financing the leverage buyout process and as a complementing to using traditional debt financing and accessing the high yield market. "Given the cost advantage of incorporating securitization into LBOs, I think the use of securitization is becoming and will become much more prevalent," said D'Albert.