S&P flips CAR outlook to positive

S&P said it revised its outlook for CAR Inc. to positive from negative and affirmed the B- ratings on the issuer and its senior unsecured notes.

“CAR's liquidity will improve if stronger demand for car rentals sustains, and the company can secure additional long-term financing. Demand for car rental in China has recovered substantially in 2023, even surpassing the pre-Covid level, as the pandemic is largely behind us. A sustained recovery could provide CAR with operating cash flows of Chinese renminbi (RMB) 2.8 billion-RMB 2.9 billion over the next 12 months, compared with RMB 1.3 billion in 2022 and RMB 1.5 billion in 2021.

“In addition, CAR's access to new sources of domestic funding has improved dramatically over the past two years. Its unutilized domestic financing has increased to RMB 5.9 billion as of June 30, 2023 (including uncommitted credit facilities), from RMB 3.8 billion at the end of 2022. CAR's issuance of asset-backed securities that it plans to close in the near future will further aid liquidity,” S&P said in a press release.

However, the agency said it expects CAR’s liquidity to stay tight after the early redemption of its dollar-denominated senior notes later this month. “The company can likely manage its liquidity through car purchases and disposals as well as through domestic financing.”

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