Moody's rates Europcar notes B1, B2

Moody's Investors Service said it assigned a provisional Ba3 corporate family rating to Europcar Groupe SA, a provisional B1 rating to its proposed subordinated secured floating-rate notes due 2013 and a provisional B2 to its senior subordinated unsecured notes due 2014. Of the €500 million in total note issuance, the split between two tranches is expected to be roughly equal. The outlook is stable.

The agency said the ratings are based on the pro-forma capital structure resulting from the leveraged buyout transaction of the Europcar Group from Volkswagen AG by the new shareholder Eurazeo, which is expected to be closed in May.

The ratings also reflect Europcar's strong brand and market position in the key European rental car markets, solid degree of regional diversification enhanced by stable earning contributions from its global franchise network, relatively stable operating performance levels through the cycle, cost structure flexibility and the relative sound financial profiles of the majority of Europcar's diversified car supplier base, the agency said.

Factors that constrain Europcar's ratings include its limited absolute scale, relatively weak debt protection measures, the prospect of increasing debt levels in line with a further expansion of the fleet size, fleet purchase conditions which might be burdened by a need to further diversify fleet composition and challenges associated with the penetration of the replacement rental market and the international rental car markets, Moody's said.

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