07 August 2018 by jbchevrel
Despite growing competition and sluggish demand in the car rental industry, Hertz (HTZ) reported better-than-expected Q2 results (revenue was $2.39B vs $2.31B). On the back of that, the CDS is tighter -108bp and the stock is up 24%, as I write. That said, Net Debt/EBITDA is still high (10x) and the company is still losing money (although less than expected). It is one of the biggest shorts (Short Interest 25% of Free Float), and most analysts agree that the bearish sentiment is likely to stay, in part due to the ride-sharing-induced lack of pricing power in the industry. HTZ’s peer Avis Budget (CAR) is tighter -28bp in sympathy, ahead of its own release, post US close tonight. Elsewhere it was a risk-on session which saw CDS indices tighten across the board, taking most on-the-run skews down, except on CDX HY and iTraxx Australia.