Deals
Hertz's Junkyard Credit Puts Costly Dent in Turnaround Plan
- A lower loan rate means pledging assets, irking bondholders
- Higher new-car costs, low prices for old ones squeeze company
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Hertz Global Holdings Inc., facing a huge pile of debt payments and big bills to upgrade its fleet, is getting the bond market’s version of sticker shock.
Refinancing costs are surging after more than a quarter of the car-rental company’s market value was obliterated in one week and a gauge of its credit risk jumped to the highest since the financial crisis. Those rising costs could effectively shut Hertz out of the unsecured bond market it’s relied on for years to replenish cash and purchase cars. With interest expenses already topping half a billion dollars a year, Hertz may have to pledge more of its assets to creditors to keep those costs from going even higher.