Moody's cuts Hertz notes to B2

Moody's Investors Service said it lowered to B2 from Baa3 the pre-acquisition senior unsecured notes of The Hertz Corp. that were not tendered in connection with the acquisition of Hertz by a private equity group consisting of Clayton, Dubilier & Rice Inc., The Carlyle Group and Merrill Lynch Global Private Equity.

The acquisition closed on Dec. 21, and the tender for pre-acquisition debt expired on Dec. 29.

Moody's said the downgrade reflects the fact that the untendered, pre-acquisition obligations have been stripped of restrictive covenants as a result of the tender and do not benefit from the same level of asset protection as the new senior unsecured debt issued by Hertz as part of the funding of the acquisition.

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