OREANDA-NEWS.  Fitch Ratings has assigned Driver France Compartment Driver France Two final ratings as follows:

EUR465m class A: 'AAAsf'; Outlook Stable
EUR16.2m class B: 'A+sf'; Outlook Stable
EUR15.3m Class C: not rated

This transaction is the second public securitisation of French auto loan receivables originated by Volkswagen Bank GmbH (VWB) under the Driver brand.

KEY RATING DRIVERS

Portfolio Credit Risk
Fitch analysed obligor credit risk by forming base-case default expectations (2%) and recovery assumptions (42.6%), stressing these assumptions according to the rating of each note.

No Historical Recovery Data
VWB has provided Fitch with separate default and loss data covering five years. However, due to the extended recovery process (up to 24 months) the loss data was insufficient to derive implicit recovery assumptions. Therefore, Fitch also considered data from peer originators in the French market, taking into account the recovery process of VWB and how this compares with other auto loan originators in the French market.

Sensitivity to Back-Loaded Defaults
As is typical for Driver structures, the initial sequential note amortisation can change to pro-rata style amortisation in the absence of a performance trigger breach. Should defaults be back-loaded, a switch to a fully sequential note amortisation may occur fairly late, leaving noteholders with lower protection. However, the initial target overcollateralisation (OC) protects the structure from the effects of a rapid switch to pro-rata amortisation.

Prepayment Risk
VWB undertakes to indemnify the issuer from prepayment losses. If it fails to do so, the transaction will be exposed to losses, which we have factored into our analysis.

Servicing Continuity Risk
VWB is the servicer. No back-up servicer has been appointed at closing. However, servicing continuity risks are mitigated by, among other things, the monthly transfer of borrowers' details, a commingling reserve and a reserve fund to cover liquidity.

Asset Outlook
Fitch has a stable outlook for French auto ABS assets. The agency considers unemployment levels and used car values as key drivers of asset performance.

TRANSACTION CHARACTERISTICS

The originator is a wholly-owned subsidiary of Volkswagen Financial Services AG, which itself is a wholly owned subsidiary of Volkswagen AG (A/Stable/F1).

The securitised portfolio consists of fixed-rate amortising loans advanced to individual and commercial customers for the purchase of new or used vehicles. They are treated as unsecured even if the servicer has a legal recourse to the underlying vehicle in certain cases.

The issuer is the second compartment of Driver France FCT, a new French securitisation fund (Fonds Commun de Titrisation) established to refinance assets originated by entities within the Volkswagen group. It is co-owned by France Titrisation (the management company) and BNP Paribas Securities Services (the custodian) and is governed by the provisions of the French Monetary and Financial Code.

Initial CE for the class A and class B notes consists of OC (7% and 3.8%, respectively) based on a total asset pool of EUR500m and the floor of the amortising cash reserve of 1% of the initial portfolio balance.

The EUR500m transaction portfolio consists of 66,975 loan contracts. The transaction is static and started amortising on the closing date. Repayment of note principal switches between sequential and a quasi-pro-rata allocation, based on transaction performance.

RATING SENSITIVITIES

Fitch tested the rating sensitivity of the notes to various scenarios, including an increase in the base case default rate and/or a decrease in the base case recovery rate for the portfolio. The model-implied sensitivities indicate that an increase in the base case default rate by 50%, together with a decrease in the base case recovery rate by 50%, may result in a seven-notch downgrade of the class A notes, to BBB+sf' and a six-notch downgrade of the class B notes, to 'BB+sf'.

DUE DILIGENCE USAGE

No third party due diligence was provided or reviewed in relation to this rating action.

DATA ADEQUACY

Fitch reviewed the results of a third-party assessment conducted on the asset portfolio information, which indicated no adverse findings material to the rating analysis. This third- party assessment focused in particular on the compliance of the pool of the securitised portfolio with the transaction's eligibility criteria.

Fitch conducted a review of a small targeted sample of Volkswagen Bank Gmbh's origination files and found the information contained in the reviewed files to be adequately consistent with the originator's policies and practices and the other information provided to the agency about the asset portfolio.

Overall, Fitch's assessment of the asset pool information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable.

SOURCES OF INFORMATION

The information below was used in the analysis.
-Pool stratification data provided by VWB at 31 May 2015
-Monthly origination volumes, dynamic delinquency data, prepayment data, and data on cumulative defaults and losses from at least 2010 to 2014, split by different sub-pools when possible by VWB as of 31 December 2014.