Hertz priced an upsized offering of $500 million of bonds backed by fleet leases, according to a person familiar with the transaction.
Hertz Fleet Lease Funding LP Series 2013-3, which was originally marketed at $426 million, consists of four classes of floating-rate notes with a final maturity of 2027.
Barclays Capital and J.P. Morgan are the lead underwriters.
The senior, $461 million tranche with weighted average life (WAL) of 1.93 years priced at par to yield 55 basis points over one-month Libor. It is rated Aaa’ by Moody’s Investors Service and AAA’ by DBRS.
A $13.375 million tranche with a WAL of 2.83 years and an Aa2/AA rating priced at par to yield Libor plus 105 basis points.
A $12.875 million tranche with a WAL of 2.88 years and an A2/AA rating priced at par to yield Libor plus 145 basis points.
A $12.625 million tranche with a WAL of 2.92 years and a Baa2/BBB rating priced at par to yield Libor plus 200 basis points.
Moody’s counts among the deal’s strengths the fact that a sizeable portion of pool, or 51%, is rated by Moody’s; the relatively high diversity of industries in the pool of leases, and the good historical performance of the pool.
The deal’s weaknesses include the relatively high lessee and geographical concentrations. The top state, Texas, accounts for 18.3% of the pool.
Also, the transaction has a revolving period of one year and its composition could change during this time.
The Series 2013-3 is Hertz’ third fleet lease securitization of 2013 and its first term facility. It follows close on the heels of two variable funding deals that Hertz brought to market in October totaling $850 million.
