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Press Release: S&PGR Asgns Prelim Rtgs To Driver Australia Four Trust ABS

24 Apr 2017 1:02 am
 
 
The following is a press release from Standard & Poor's: 
 
MELBOURNE (S&P Global Ratings) April 24, 2017--S&P Global Ratings today 
assigned its preliminary ratings to two classes of asset-backed securities 
(ABS) to be issued by Perpetual Corporate Trust Ltd. as trustee of Driver 
Australia four 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 fourth closed-pool term transaction backed by collateral 
originated by VWFS Australia. The preliminary ratings reflect the following 
factors: 
     -- The credit risk of the underlying collateral portfolio and the credit 
support available are commensurate with the preliminary 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 may be applied toward redemption of the class A and class B notes, 
providing additional support. 
     -- 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 has the 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 preliminary 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 on the transaction closing date. The reserve is sized at 1.2% of the 
discounted receivables balance, as well as being subject to a floor of the 
lesser of A$5.0 million 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. 
     -- Our preliminary ratings also take into account the counterparty 
support provided by Australia and New Zealand Banking Group Ltd. (ANZ) as bank 
account provider and by the interest-rate swap provider. Fixed-to-floating 
interest-rate swaps will be 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 "Criteria: 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. 
 
A copy of S&P Global Ratings' complete report for Driver Australia four Trust 
can be found on RatingsDirect, S&P Global Ratings' web-based credit analysis 
system, at "http://www.globalcreditportal.com". 
 
PRELIMINARY RATINGS ASSIGNED 
Class      Rating        Amount (mil. A$) 
A          AAA (sf)      441.0 
B          A+ (sf)        25.0 
 
RELATED CRITERIA 
 
     -- Legal Criteria: Structured Finance: Asset Isolation And 
Special-Purpose Entity Methodology, March 29, 2017 
     -- Criteria - Structured Finance - General: Global Framework For 
Assessing Operational Risk In Structured Finance Transactions, Oct. 09, 2014 
     -- Criteria - Structured Finance - ABS: Global Methodology And 
Assumptions For Assessing The Credit Quality Of Securitized Consumer 
Receivables, Oct. 09, 2014 
     -- Criteria - Structured Finance - General: Global Framework For Cash 
Flow Analysis Of Structured Finance Securities, Oct. 09, 2014 
     -- Criteria - Structured Finance - General: Counterparty Risk Framework 
Methodology And Assumptions, June 25, 2013 
     -- General Criteria: Methodology: Credit Stability Criteria, May 03, 2010 
     -- General Criteria: Understanding Standard & Poor's Rating Definitions, 
June 03, 2009 
     -- Criteria - Structured Finance - General: Standard & Poor's Revises 
Criteria Methodology For Servicer Risk Assessment, May 28, 2009 
 
RELATED RESEARCH 
 
     -- Australia And New Zealand Structured Finance Scenario And Sensitivity 
Analysis: Understanding The Effects Of Macroeconomic Factors On Credit 
Quality, Aug. 1, 2014 
     -- Global Structured Finance Scenario And Sensitivity Analysis: 
Understanding The Effects Of Macroeconomic Factors On Credit Quality, July 2, 
2014 
     -- Yield Considerations In Standard & Poor's Cash-Flow Analysis Of 
Australian And New Zealand ABS, Nov. 21, 2013 
     -- Repayment Structures Of Australian RMBS and ABS Play An Important Role 
In Supporting Ratings Stability, Aug. 16, 2010 
     -- ABS Performance Watch: Australia and New Zealand, published quarterly 
 
The issuer has not informed Standard & Poor's (Australia) Pty Limited whether 
the issuer is publicly disclosing all relevant information about the 
structured finance instruments that are subject to this rating report or 
whether relevant information remains non-public. 
 
REGULATORY DISCLOSURES 
Please refer to the initial rating report for any additional regulatory 
disclosures that may apply to a transaction. 
 
AUSTRALIA 
Standard & Poor's (Australia) Pty. Ltd. holds Australian financial services 
licence number 337565 under the Corporations Act 2001. Standard & Poor's 
credit ratings and related research are not intended for and must not be 
distributed to any person in Australia other than a wholesale client (as 
defined in Chapter 7 of the Corporations Act). 
 
 
Primary Credit Analyst: Elizabeth A Steenson, Melbourne (61) 3-9631-2162; 
                        elizabeth.steenson@spglobal.com 
Secondary Contact: Luke Elder, Melbourne (61) 3-9631-2168; 
                   luke.elder@spglobal.com 
 
 
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