Driver Australia Master Trust ABS Ratings Affirmed

Stocks and Financial Services Press Releases Thursday June 28, 2018 11:21
MELBOURNE--29 Jun--S&P Global Ratings

MELBOURNE (S&P Global Ratings) June 28, 2018--S&P Global Ratings today affirmed its ratings on two classes of asset-backed securities (ABS) issued by Perpetual Corporate Trust Ltd. as trustee of Driver Australia Master Trust (see list). The notes are backed by chattel mortgage, commercial hire-purchase, and consumer loan contracts secured by passenger and light commercial motor vehicles that were originated by Volkswagen Financial Services Australia Pty Ltd. (VWFS Australia).

This is the only revolving–pool transaction backed by collateral originated by VWFS Australia. The transaction's revolving period was extended for a further 12 months, beginning June 26, 2018.
The rating affirmations reflect:
  • That the credit risk of the underlying collateral portfolio and the credit support available are commensurate with the ratings assigned. Credit support for the class A notes comprises the subordination of the class B notes and the subordinated loan, and overcollateralization. Credit support for the class B notes includes the subordination of the subordinated loan and overcollateralization. In addition, any balance remaining in the cash reserve on the maturity date of the notes or when the receivables pool balance reaches zero can be applied toward redemption of the class A and class B notes, which could provide additional support.
  • That all contract payments, including the residual or balloon payments, are an obligation of the borrower. As a result, the trust is not exposed to any market-value risk associated with the sale of the motor vehicles (on performing receivables), which is a risk that may be associated with other products, such as operating leases.
  • The issuer's capacity to pay interest to the class A and class B note holders in full on each interest payment date, and to repay principal in full no later than the final maturity date, under rating stresses commensurate with the ratings assigned. All rating stresses are made on the basis that the issuer does not call the notes on or beyond the call-option date, and that the notes must be fully redeemed via the mechanisms under the transaction documents. Timely payment of senior expenses and note interest is supported by the use of principal collections and an amortizing cash reserve funded at closing by VWFS Australia--equal to 1.2% of the aggregate class A and class B note balance--and subject to a floor of the lesser of 0.6% of the maximum receivables balance reached during the revolving period and the outstanding amount of the class A and class B notes.
  • The legal structure of the issuer, which is established as a special-purpose entity, and meets our criteria for insolvency remoteness.
  • The counterparty support provided by Australia and New Zealand Banking Group Ltd. (ANZ) as bank account provider and ING Bank N.V. as interest-rate swap provider. Fixed-to-floating interest-rate swaps are provided to hedge the mismatch between the fixed-rate payments on the receivables and the floating-rate interest payable on the notes. The transaction documents for the swap and bank accounts include downgrade language consistent with our "Counterparty Risk Framework Methodology And Assumptions" criteria, published on June 25, 2013, that requires the replacement of the counterparty or other remedy, should its rating fall below the applicable rating.
RATINGS AFFIRMED
Class Rating Amount (mil. A$)
A AAA (sf) Up to 1750.0
B A+ (sf) Up to 140.0

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