Moody's rates Volkswagen Leasing debt A3

Moody's Investors Service said it assigned A3 and Aaa.mx backed long-term global local-currency and Mexican National Scale senior unsecured debt ratings to Volkswagen Leasing, SA de CV's proposed issuance of certificados bursátiles.

The outlook is stable.

The issue will total up to Ps. 2.5 billion with a maturity of 728 days and a floating coupon, Moody's said.

This is the third long-term issuance of certificados bursátiles under the company's long- and short-term revolving debt program, which was authorized in February 2018 for up to Ps. 20 billion or its equivalent in inflation-indexed investment units, the agency said.

The proceeds will be used to retire other debt that matures in June, Moody's said.

The ratings reflect an explicit guarantee from the company's parent, Volkswagen Financial Services AG, the agency said.

The guarantee does not satisfy the agency's core principle for credit substitution that specifies that the transfer, assignment or amendment of the guarantee by the guarantor should not result in a deterioration of the credit support provided by the guarantee, Moody's explained.

Nevertheless, this weakness is offset by the strategic fit and importance of Volkswagen Leasing, Mexico's operation for the German parent, the agency said.

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