Hertz Global Holdings Inc.’s $2.6 billion purchase of Dollar Thrifty Automotive Group Inc. will increase total debt by as much as 28 percent and delay the junk-rated company’s long-sought ascent to investment grade.
Hertz obtained $1.95 billion in financing to support its buyout and will assume $1.6 billion in Dollar Thrifty’s obligations. Park Ridge, New Jersey-based Hertz’s credit-default swaps, which rise as confidence in a borrower’s creditworthiness diminishes, increased 6.6 basis points yesterday, according to data provider CMA, which is owned by McGraw-Hill Cos.
The auto-rental company reported a 7.4 percent increase in revenue during the second quarter ended June 30, to $2.23 billion from $2.07 billion in the comparable year-ago period, it said in an Aug. 1 regulatory filing. Net income was $92.9 million, compared with $60.1 million a year earlier and total debt was $12.5 billion.
“Larger names are particularly doing well,” she said about the current fixed-income market. “There’s an insatiable demand for paper.”