How Left-for-Dead Hertz Bonds Returned 1,000%
When the rental-car company filed for bankruptcy, its debt fell to pennies on the dollar. Now investors are poised for a full recovery.
Hertz stands out as one of the biggest comeback stories.
Photographer: Luke Sharrett/Bloomberg
About 11 months ago, it looked as if Hertz Global Holdings Inc. would join an infamous list of companies with bonds that never paid investors a penny in interest. Known colloquially as the “no-coupon-at-all” club, its potential induction reflected the simple fact that the rental-car giant borrowed in November 2019, just before the Covid-19 pandemic ravaged its business and forced it into bankruptcy in May 2020.
At the time, Hertz’s prospects seemed bleak. Unlike the U.S. airline industry, there was no government bailout for the company or its competitors Avis Budget Group Inc. and Enterprise Holdings Inc. The pressing matter for health officials was encouraging practices to contain the virus’s spread — the timeline for developing effective vaccines was anyone’s guess. Hertz’s bonds reflected this uncertainty, with securities due in 2022 and 2028 trading at an average of less than 10 cents on the dollar on May 4. It was a stunning collapse from when they exchanged hands at more than 100 cents just three months earlier.