Hertz raised $4 billion through two ABS offerings from its new term ABS shelf, Hertz Vehicle Financing III. As a testament to the strength of the securitization market, investors’ search for yield in a prolonged low interest rate environment, and growing confidence in the recovery of the travel sector, Hertz raised this capital even as the company emerged from a highly visible Chapter 11 bankruptcy filing, a period of tumultuous leadership changes, and a global pandemic that shuttered the travel and tourism industry.

Extraordinary times call for extraordinary measures. And the Fed continues to respond appropriately. On April 9, the Federal Reserve once again drew on its full range of authorities to expand and establish lending facilities to provide up to $2.3 trillion in loans to stabilize households, communities and businesses of all sizes during the pandemic crisis and to “ensure that the eventual recovery is as vigorous as possible”.

Aircraft ABS are currently insulated from coronavirus-related disruption in global travel. Still, a prolonged slowdown in global air traffic would negatively impact aircraft ABS structures.

SFA's recent CLO white paper explores balancing crucial lending with financial safety and soundness.