VW Credit, a subsidiary of Volkswagen Group of America, is preparing to sell at least $1.4 billion in securitized bonds, backed by a pool of its originated retail auto lease contracts.
The deal, Volkswagen Auto Lease Trust 2025-B, can be upsized to $1.7 billion and will issue the notes through five tranches of class A notes, and is expected to close on September 16, according to Moody's Ratings, S&P Global Ratings and Asset Securitization Report's deal database.
Regardless of the securitization size, the A1 notes have a legal final maturity date of Sept. 21, 2026; the A2 notes mature on April 20, 2028; and the A3 and A4 notes mature on Jan. 22, 2029 and May 20, 2030. All the tranches benefit from the same level of initial hard credit enhancement, 14.50% and an initial reserve of 0.25%.
Overcollateralization can hit a target of 17.75%, and total hard credit enhancement can reach 14.50%, while the reserve account's target will stay at its initial rate of 0.25%, according to S&P.
TD Securities, Cirigroup Global Markets, Scotia Capital and
VW Credit is an experienced servicer and sponsor of securitization deals, and has been issuing ABS deals since 2010, which is one positive credit characteristic, according to Moody's. Additionally, the deal will pay principal on notes sequentially. As the deal amortizes, non-declining credit enhancement will grow as a percentage of remaining assets, and that includes overcollateralization.
Almost all the notes are fixed rate, except for the A2-B tranche which pay a coupon based on the one-month Secured Overnight Financing Rae (SOFR), according to the rating agencies.
Some 45,784 leases underly the securitized bonds, extended to Volkswagen (51.8%) and Audi (48.1%) buyers, according to S&P. On a weighted average (WA) basis, the pool's leases have an original term of 36.7 months and a remaining term of 25.3%.
S&P assigns A1+ to the A1 notes; and AAA to the A2 through A4 notes. Moody's assigns P1 to the A- notes and Aaa to the A2 through A4 notes.
