Volkswagen Leasing plans to issue a €723 million ($937 million) of securities backed by German auto lease receivables, according to rating agency reports.

VCL Multi-Compartment S.A., Compartment VCL 20 will be the issuers 26th publicly rated German auto lease transaction. It follows on the heels of a U.K. auto loan deal that the sponsor priced the first week of September.

BNP Paribas and DZ Bank are joint lead managers; and Bayerische Landesbank, Llyods and HSBC have been hired as co-managers.

All of the receivables to be securitized have previously been refinanced through a warehousing facility, VCL Master S.A., Compartment 1.

The transaction is being rated by both Standard & Poor’s and DBRS. It will offer investors a €700.5 million ,‘AAA’/ ‘AAA’ rated tranche and a €22.5 million‘A+’ rated tranche; both tranches mature on June 21, 2020.

Defaults on transactions backed by auto leases are heavily correlated to the economy.  In this deal, the leases are tied to a relatively healthy Germany economy. According to S&P,  Germany’s GDP growth will increase to 1.8% in 2014, to 2.0% in 2015, and to 2.3% in 2016.

“In our view, changes in GDP growth and in the unemployment rate are key determinants of portfolio performance,” the presale report states. “Our near- to medium-term view is that the German economy will remain resilient and record positive growth”.

Volkswagen priced its U.K. auto loans securitization — Driver UK two earlier this month.  Sized at £1.2 billion ($1.96 billion), the deal is currently the highest-volume Auto ABS transaction conducted in the U.K. currency.

The transaction securitized motor vehicle financing contracts and was sold in two tranches at the lower end of the price range. The class A Notes were priced at 42 basis points over one-month Libor and the class B Notes priced at 90 basis points.  

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