VW Credit is preparing to sponsor a $750 million securitization of prime quality retail auto loans and leases.
The capital structure for Volkswagen Auto Loan Enhanced Trust, series 2025-2, will remain the same, even though the deal can potentially be upsized to $1 billion, according to rating agencies assessing the notes.
VALET 2025-2 will issue five classes of 'A' notes, almost all of which are fixed, according to Moody's Ratings. Only the A2B notes could be benchmarked to the Secured Overnight Financing Rate (SOFR). The A2B has some interest rate mismatching, since the underlying assets pay fixed interest rates, while the ABS pay floating rates.
The A3 notes contain the bulk of the securities in the deal.
As for the notes' legal final maturity dates, they include Nov. 20, 2026 for the A1 notes and Aug. 21, 2028 on the two A2 tranches, according to Moody's.
Lead underwriters include
VALET 2025-2 could have some credit challenges, according to Moody's, with deterioration in loan performances in Volkswagen's recent vintages, compared with loans originated pre-COVID-19. Tariff policies could also have some residual impacts on consumers, the rating agency said.
But several elements mitigate these credit risks. All the notes benefit from the same level of total initial hard credit enhancement, of 4.25%, Moody's said, and the layers of credit enhancement includes a reserve account representing 0.25%. Other forms of credit enhancement include excess spread and yield supplement overcollateralization.
Moody's assigns P1 to the A1 notes and Aaa to the A2 through A4 notes.
