Volkswagen Leasing is prepping to launch a €475 million ($602 million) auto lease ABS deal dubbed VCL 12 with pricing scheduled for next week, published reports indicate.
A pan-European roadshow for the securitization was reportedly started this week.
Standard & Poor's has assigned preliminary credit ratings to the €475 million ABS floating-rate notes. The transaction is backed by German auto lease receivables that were originated and sold by VW Leasing.
According to S&P, VCL 12 will benefit from a subloan of €20 million that an affiliate of Volkswagen AG, which is the subordinated lender, will grant. The subordinated loan will provide credit enhancement in the form of subordination for the class A and B notes and will rank below the notes for payments of interest and principal, the agency said.
The loan, however, will not form part of the securitization, S&P said. The preliminary ratings reflect S&P''s analysis of the ability of the servicer, VW Leasing, to fulfill its role in the deal and the cash flow mechanics of the offering under various stress scenarios.
The auto firm’s leasing division was previously rumored to be privately launching a deal with fixed-rate notes called Private Driver 2010-1. This deal was supposed to comprise a Class A note worth €550 million with a 2.7-year weighted average life, a Schuldschein tranche, which are German promissory notes, as well as a Class B tranche. It remains unclear whether Volkswagen will push through with this private offering.
"The fixed-rate deal will only be attractive to specific investor base, hence will not qualify for a broader investor base," UniCredit analysts said in reference to the private placement deal.
According to a Bloomberg report, the German car manufacturer might also be considering a multi-currency asset securitization that would expand its investor base into Brazil, Poland and Japan. The report also said the company is also considering transactions by its units in Netherlands, France and Spain.
A Fitch Ratings report released today showed that although 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, totaling €1 billion.
A comparison with 2Q09 showed a reduction in new auto ABS issuance in 2Q10 of three times.