Dollar Thrifty credit rating cut further - Car Rental News
Dollar Thrifty credit rating cut further
Car Rental News - 06/04/2009
Standard & Poor's Ratings has downgraded the company’s credit rating further into junk territory.
The ratings service explained the move as related to the continuing slump in demand and the weak market for used cars, which will most likely mean a continuation of high depreciation expense.
S&P was also concerned about Dollar Thrifty’s exposure to financially-struggling auto maker Chrysler, which is attempting to combine with Fiat.
Dollar Thrifty’s long-term corporate credit rating dropped by another notch to CCC, on an outlook that is considered negative.
S&P noted that their ratings take into consideration the attempts that have been made by the rental car group to reduce its debt maturities through this year and its covenant relief obtained in February that lasts through the maturity of its corporate credit facility in 2013.
It added that the ratings are also reflective of Dollar Thrifty’s small market share in the industry and the competitiveness and cyclical nature of airport-based car rentals.
"Dollar Thrifty faces considerable uncertainty regarding its 2009 operating performance," the rating service went on to say, adding that depressed used-car prices would likely reduce the revenue that the group needs to pay the $500 million in asset-backed securities debt that matures next year.