Volkswagen is preparing to issue a new auto ABS deal with fixed-rate notes called Private Driver 2010-1.
The Germany-based company began showing the deal earlier in the week, according to published reports. It will comprise a Class A note (€550 million ($700.970 with 2.7-year weighted average life), a Schuldschein (German promissory notes) piece and a Class B tranche.
"The fixed-rate deal will only be attractive to specific investor base, hence will not qualify for a broader investor base," UniCredit analysts said.
According to UniCredit analysts, around 38% of all placed tranches are still not publicly placed, and are arranged privately with pre-selected investors or as club deals.
Auto ABS tranches placed with investors are provided with relatively generous credit enhancement levels.
Unicredit estimated that 40% of the auto ABS tranche volume sold offer a credit enhancement of between 5% and 10%, 36% of the placed tranche volume offers credit enhancement levels of between 10% and 15%. Additionally, 24% of the European auto ABS volume placed with investors features credit enhancement levels of over 15%.
A Fitch Ratings report released today showed that while German ABS is performing well, overall new auto ABS issuance volumes in 2Q10 were four times lower than in 1Q10, with only two German auto ABS deals launched, totalling €1 billion.
A comparison with 2Q09 showed a reduction in new auto ABS issuance in 2Q10 of three times.