Moody’s lowers Volkswagen Financial, VW Bank

Moody’s Investors Service said it downgraded the long-term debt ratings of Volkswagen Financial Services AG, its guaranteed subsidiaries and Volkswagen Bank GmbH (VW Bank) to A1 from Aa3.

Moody’s also said it downgraded the long-term deposit ratings of Volkswagen Bank to A1 from Aa3.

The agency also said it downgraded the bank’s subordinate debt ratings to Baa1 from A3 and the entity’s adjusted baseline credit assessment to A3 from A2.

The actions follow the downgrade of Volkswagen AG’s ratings to A3 from A2.

The ratings reflect the company’s flexibility to offset current headwinds for wholesale-market funding by less confidence-sensitive funding channels, including deposits and asset-backed securities in its funding mix, the agency said.

Moody’s said it believes Volkswagen will remain committed to protecting its captive finance subsidiaries from the financial fallout stemming from irregularities in the company’s automotive business.

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