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Hertz and Avis Bonds Slide as Used-Car Prices Come Down

  • Used-car glut pushes down value of resales, vexing creditors
  • Competition from discounted new cars adds to pressure
Updated on

Rental-car company bonds are turning into lemons.

Debt issued by Hertz Global Holdings Inc. and Avis Budget Group Inc., which had traded at or above par in recent years, tumbled to new lows earlier this month amid signs that used-vehicle prices are dropping twice as much as expected. That’s bad news for companies that collectively have to dispose of about 400,000 vehicles a year, and especially for Hertz, whose junk-rated debt is teetering close to a downgrade.