Hertz plans to issue a $400 million of bonds backed by fleet leases, according to a presale report issued by Moody's Investors Service.
The deal, Hertz Fleet Leases Funding LP Series 2014-1 will offer $355.6 million of class A1, floating-rate notes that are due April 2028. Moody’s Investors Service expects to rate the notes Aaa’. Also offered are Aa2’-rated, class B notes, A2’-rated class C notes and Baa2’-rated class D notes.
Barclays and JP Morgan are lead underwriters on the deal.
Moody’s noted in the presale report that the pool has a high concentration of obligors when compared to other fleet lease ABS transactions. The largest lessee accounts for 7.81% of the pool, which the transaction documents allow to increase to 9.75%. The top five lessees account for 27.05% of the pool and the top 10 account for 40.33% of the pool by securitization value of the leases.
The top state concentration is 18.33%, also higher than other fleet lease ABS transactions which are typically less than 13%.
However the higher credit enhancement on the notes (the class A notes are structured with 14.10%) mitigate the risk of high obligor concentration, said Moody’s.
The deal, similar to the issuer's previous deals, is structured with a revolving period of one year and its composition could change during this time, according to the presale report.
