Moody's rates Cendant Car Rental notes Ba3, loans Ba2

Moody's Investors Service said it assigned a Ba2 corporate family rating and SGL-2 speculative grade liquidity rating to Cendant Car Rental Group LLC, Ba2 ratings to its $1.5 billion five-year secured revolving credit facility and $875 million six-year secured term loan and Ba3 ratings to its $1 billion senior unsecured notes due 2014 and 2016. The outlook is stable.

Moody's said the ratings anticipate that following the completion of the proposed separation of Cendant Corp. into four independent, publicly traded companies - Real Estate Services, Hospitality Services, Travel Distribution and Vehicle Rental - Cendant Car Rental Group LLC will be the parent company of Cendant's Vehicle Rental operations and will be renamed Avis Budget Car Rental LLC.

The ratings reflect Moody's view that the business model, brand strength and cost structure of Cendant Car Rental position it to compete effectively with key peers in the vehicle daily rental business.

However, the company's financial leverage and potential risks related to significant fleet concentration in General Motor vehicles are factors that constrain the rating at the Ba2 level, the agency said. For fiscal 2005, Cendant Corp.'s vehicle rental segment had a debt to EBITDA ratio of 4x. Moody's predicted that Cendant Car Rental's leverage measures will demonstrate moderate improvement from this level over the intermediate term.

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