Volkswagen Financial Services AG is marketing a sixth securitization of UK-based auto vehicle leases totaling £438.1 million in receivables.

Driver UK Multi-Compartment S.A., Compartment Driver UK Six consists of 24,238 contracts to prime retail customers who have taken out personal contract purchase (PCP) agreements that include an optional final balloon installment by lessors.

The transaction will issue a senior Class A and subordinate Class B tranche of notes. The sizes are to be determined, with both Moody’s Investors Service and S&P Global Ratings each assigning preliminary AAA ratings to the senior notes in presale reports published Tuesday.

Bloomberg

The pool consists of receivables from the leases originated by Volkswagen Financial Services, and almost exactly mirror’s VWFS’ previous UK securitization for the same total of £438 million.

The mix includes more than 74% new vehicles, concentrated in Audi (49.36%), Volkswagen (8.99%) and Skoda (9.3%) branded vehicles. Most of the contracts have an average of 3.33 years remaining at a 6.33% interest rate.

The average discounted leases balance is £18,077.

Moody’s has projected a 1.5% expected cumulative net loss on the portfolio.

The deal will include a six-month revolving period, with the issuer limited to no more than 50% of the eventual pool being comprised of used vehicles.

Just over 6% of the vehicles in the pool include diesel-powered cars impacted by Volkswagen’s 2015 emissions-cheating scandal.

The deal could also be exposed to residual value risk in new diesel cars being included in the deal, given recent regulatory changes intended to curb the use of diesel engines. In the UK, for example, the government has proposed a “clean air zone framework,” according to Moody’s, in which diesel vehicles would be charged additional for failing to meet what are dubbed Euro 6 standards for reducing emissions from vehicles on the road.

The deal was arranged by Bank of America Merrill Lynch, which was a co-lead manager with Skandinavisk Enskilda Banken AB.

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