Fitch Places Budget & ANC Rental ABS Deals On Rtg Watch Neg.Business Editors NEW YORK--(BUSINESS WIRE)--Sept. 27, 2001 Fitch places the ratings of Team Fleet Financing Corporation Financing Corporation (FICO) A government agency chartered in 1987 to bail out the Federal Savings and Loan Insurance Corporation (FSLIC) by issuing bonds. (a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. of Budget Group, Inc.) and National Car Rental Financing Limited Partnership (a wholly owned subsidiary of ANC ANC abbr. African National Congress ANC African National Congress: South African political movement instrumental in bringing an end to apartheid ANC n abbr (= Rental Corporation) rental car ABS (Automatic Backup System) See backup program. transactions on Rating Watch Negative. Fitch expects rental car demand to decline over the next several months as the industry experiences a slowdown in business and leisure travel related to the tragic events of Sept. 11. As a result, Fitch anticipates fleet reductions and weaker operating results among the rental car companies. The uncertainty and potential for a prolonged pro·long tr.v. pro·longed, pro·long·ing, pro·longs 1. To lengthen in duration; protract. 2. To lengthen in extent. decline in demand, coupled with softening used car prices and continued aggressive rental pricing competition, have created instability within the rental car industry, which could have a negative impact on certain rental car ABS transactions rated by Fitch. Rental car ABS transactions are supported by monthly payments from the rental car companies to cover interest, various other carrying costs Carrying costs Costs that increase with increases in the level of investment in current assets. , and depreciation on the vehicles and the liquidation values Liquidation value Net amount that could be realized by selling the assets of a firm after paying the debt. of the rental cars. Fitch is concerned that smaller, less credit worthy rental car companies with already weakened credit profiles will be strained to make the required monthly payments to the rental car ABS transaction, should the industry face a sustained decline in rental demand. The inability of a rental car company to make required payments would cause an amortization event to occur, and would force a liquidation The collection of assets belonging to a debtor to be applied to the discharge of his or her outstanding debts. A type of proceeding pursuant to federal Bankruptcy of the cars in a transaction during a very stressful period. The confluence confluence /con·flu·ence/ (kon´floo-ins) 1. a running together; a meeting of streams.con´fluent 2. in embryology, the flowing of cells, a component process of gastrulation. of these unique events may cause a deterioration of credit enhancement Credit Enhancement A method whereby a company attempts to improve its debt or credit worthiness. Notes: Credit enhancements take many different forms. An example of a credit enhancement would be conversion rights added on to a debt instrument in order to lower the issuing beyond original expectations. Fitch relies on the timely liquidation of the collateral to repay outstanding rental car ABS transactions. In particular, ongoing vehicle maintenance and the strength of the used car market are key factors in protecting collateral values. Fitch continues to assess the quality of each rental car company's maintenance and servicing procedures, however as the credit profile of a rental car company deteriorates the commitment to servicing will inevitably decline as well. Manufacturer repurchase obligations on a majority of the rental car fleet and credit enhancement sized as a multiple of current depreciation rates provide significant protection against declining used car prices. Fitch will monitor factors which may negatively impact existing ratings over the next six months, including business and leisure rental demand, future bookings, fleet utilization ratios, program versus non-program composition, used car prices and auction results from defleeting initiatives, and rental pricing competition. Below is a list of the 144A and public rental car transactions placed on Rating Watch Negative by Fitch. National Car Rental Financing LP 1996-1 -- Class A-4 notes, rated A, Rating Watch Negative; -- Class B-3 notes, rated BBB, Rating Watch Negative. Team Fleet Financing Corp. Series 1996-1 Rental Car Asset Backed Notes -- Class A notes, rated A, Rating Watch Negative; -- Class B notes, rated BBB BBB A medium grade assigned to a debt obligation by a rating agency to indicate an adequate ability to pay interest and repay principal. However, adverse developments are more likely to impair this ability than would be the case for bonds rated A and above. , Rating Watch Negative. Series 1997-1 Rental Car Asset Backed Notes -- Class A notes, rated A, Rating Watch Negative; -- Class B notes, rated BBB, Rating Watch Negative. Series 1998-2 Rental Car Asset Backed Notes -- Class A notes, rated AA, Rating Watch Negative; -- Class B notes, rated A, Rating Watch Negative; -- Class C notes, rated BBB, Rating Watch Negative. Series 1998-3 Rental Car Asset Backed Notes -- Class A notes, rated AA, Rating Watch Negative; -- Class B notes, rated A, Rating Watch Negative; -- Class C notes, rated BBB, Rating Watch Negative. Series 1998-4 Rental Car Asset Backed Notes -- Class A notes, rated AA, Rating Watch Negative; -- Class B notes, rated A, Rating Watch Negative; -- Class C notes, rated BBB, Rating Watch Negative. Series 1999-3 Rental Car Asset Backed Notes -- Class A notes, rated AAA AAA: see American Automobile Association. (Triple A) A common single-cell battery used in a myriad of electronic devices of all variety. Like its double A (AA) cousin, it provides 1.5 volts of DC power. When used in series, the voltage is multiplied. , Rating Watch Negative; -- Class B notes, rated AA, Rating Watch Negative; -- Class C notes, rated A, Rating Watch Negative; -- Class D notes, rated BBB, Rating Watch Negative. Series 1999-4 Rental Car Asset Backed Notes -- Class A notes, rated AAA, Rating Watch Negative; -- Class B notes, rated AA, Rating Watch Negative; -- Class C notes, rated A, Rating Watch Negative; -- Class D notes, rated BBB, Rating Watch Negative. Series 2001-2 Rental Car Asset Backed Notes -- Class A notes, rated AAA, Rating Watch Negative; -- Class B notes, rated AA, Rating Watch Negative; -- Class C notes, rated A, Rating Watch Negative. |
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