Hertz proposed senior secured notes win Fitch B+(EXP) rating

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Hertz senior notes Fitch rating

Highlights

Hertz's proposed first lien senior secured exchangeable notes received an expected B+(EXP) Fitch rating, matching existing 1L secured debt, with amount, coupon, and maturity still undetermined.
Fitch expects proceeds from the new notes to be used for general corporate purposes, including repayment of first lien revolver borrowings, viewing the transaction as leverage neutral.
Fitch maintains a Negative Outlook on Hertz's issuer rating, citing weak profitability, structurally high debt, and risks of downgrade if leverage remains above 5.0x or liquidity weakens.

Proposed debt issue and rating rationale

As reported by Fitch Ratings, The Hertz Corporation's proposed first lien senior secured exchangeable notes are assigned an expected 'B+(EXP)' rating, in line with the company's existing first lien senior secured debt. Fitch says the proposed notes are expected to rank pari passu with Hertz's current 1L senior secured obligations, supporting the equalized rating and reflecting expected superior recovery prospects under a stress scenario.

The amount, coupon and final maturity of the notes are to be determined at issuance. Fitch says the proceeds are expected to be used for general corporate purposes, including repaying outstanding borrowings under Hertz's first lien senior secured revolving credit facility.

Fitch also views the transaction as broadly leverage neutral because the expected use of proceeds does not materially add to net debt pressure. Even so, the agency says Hertz continues to carry a structurally large corporate debt load, while weak underlying earnings keep leverage under strain.

Profitability pressure and downgrade risks

Fitch estimates that, on a pro forma basis for the proposed issuance, leverage measured as gross debt to adjusted corporate EBITDA remains negative for the trailing 12 months ended the first quarter of 2026. The agency says a failure to materially improve earnings and reduce leverage toward 5.0x could lead to a downgrade.

The Negative Outlook on Hertz's issuer default rating reflects Fitch's expectation that profitability remains weak in the near term as travel demand moderates and fleet costs stay high despite ongoing fleet rotation. Fitch adds that Hertz also faces execution risk in its turnaround strategy, which is intended to improve operating efficiency and profitability while returning leverage and interest coverage to more normalized levels.

Among the main downside triggers identified by Fitch are an inability to maintain enough liquidity for operations and near- to medium-term obligations, including 2026 unsecured notes, and a failure to deliver on fleet refresh, revenue enhancement and cost optimization plans. The agency also flags sustained leverage above 5x, corporate interest coverage below 2x, and any material loss of market share or competitive position as factors that could pressure ratings further.

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