S&P cuts Volkswagen Bank RUS bond

Standard & Poor's said it has lowered to BBB- from A- its issue credit rating on the proposed senior unsecured Russian ruble bond to be issued by Volkswagen Bank RUS.

Volkswagen Bank RUS is a licensed bank domiciled in the Russian Federation (local currency rating, BBB/negative/A-2; foreign currency rating, BBB-/negative/A-3) and is almost fully owned by Volkswagen Financial Services AG (A-/positive/A-2).

Although the public irrevocable offer is not a guarantee, the agency interpreted it to be consistent with a cross-border guarantee, given the legally binding commitments on the entity making the offer, which in S&P’s view are legally equivalent to a cross-border guarantee.

The public irrevocable offer does not, in the agency’s view, qualify the instrument for rating substitution with that of the parent, however, because various country-risk factors make the offer not always unconditional.

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