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Avis (Snr unsecured; B1, BB-; S) 2Q results up ahead

TRANSPORTATION

We said on Friday high-beta earnings this week were PostNL and VFC (tomorrow night). We missed Avis that comes tonight and nearly always brings sizeable vol with it. Equities are not even waiting for the release, selling off -11% on Friday to break a over 2yr low.


As we've said before, Avis's capital allocation policy leaves us seeing little-to-no upside in even good times. The carry is still there - which is now around 6% over Bunds for the 29/30s. But as the new 29s showed, chasing that on long-duration lines can be tough; its +70bps (on yields) since pricing in Feb while the May €200m tap of the 29s is +60bps.

Above moves are despite rates moving lower - which it has sensitivity on its vehicle financing. Depreciation as used car prices fall has been under focus; its recorded under per unit fleet costs and is running +124% yoy.


29/30s are -0.9/-0.8pts (+20-30bps today) and seem to be heading in well wide of the $ curve.

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