Avis (Snr unsecured; B1, BB-; S) {CAR US Equity}

Likely tough earnings coming up on Wednesday. Any colour on buybacks/dividends & realised & guidance for depreciation per unit (on falling used car prices & heavy defleeting) to keep an eye on. The new €29s are 1pt cheaper at 7.4%/Z+483, the 30s are at highs (on spread) at 7.6%/Z+514. - 29s screen cheap but same as previous view, not much motivation to fight till operating performance rolls over or a firmer capital allocation guidance from co.

• Looks like some nerves ahead of 1Q earnings on Wednesday night; CDS is at +422 close to recent highs & vs. $29s at +370.
• Avis is a 'Interesting name' - chose to not pay down debt & instead made sizeable equity pay-outs from its "record" year in FY23. Followed that by coming to primary twice since disappointing 4Q results earlier this year; first to refi its €350m 4.75% 26s with a €600m 7% & then to $ markets for a $1.1b ABS.
• Interest cost bump on the local refi was insignificant but adding gross €250m is a neg. for a co that loves to direct cash anywhere but to BS. Higher for longer rates is direct negative for Avis given impact on vehicle financing costs (3x the cost of corp debt costs) & rose rapidly into tail end of last year - managing fleet size (lower) may offset pressures here.