OREANDA-NEWS. Fitch Ratings has affirmed Driver UK Two's GBP670m class A notes at 'AAAsf' and GBP135.9m class B notes at 'A+sf', both with a Stable Outlook.

Driver UK two is a securitisation of UK auto loan receivables originated by Volkswagen Financial Services (UK) Ltd. (VWFS). The originator is a wholly-owned subsidiary of Volkswagen Financial Services AG (VWFS AG), which itself is a subsidiary of Volkswagen AG (A/Stable/F1). The transaction featured a six-month revolving period at closing in September 2014 before it started amortising. As of end-July 2015 the collateral pool consisted of 75,498 auto loan receivables and the transaction balance is split into balloon (81%) and fully amortising (19%) vehicle loans.

KEY RATING DRIVERS
The affirmation reflects the transaction's satisfactory performance to date. As of end-July 2015, the outstanding class A notes accounted for 76.7% of their initial balance. Credit enhancement has increased to 33.3% from 27% for the class A notes and to 19.6% from 15.5% for the class B notes. Credit enhancement is provided by overcollateralisation and the floor of the amortising cash reserve.

Cumulative defaults and 30-days plus delinquency ratios have been low since inception. The reserve fund is fully funded at the required amount.

Fitch expects the performance of UK consumer ABS transactions to remain stable based on the agency's expectations on their performance and a steady economic outlook. Fitch forecasts GDP growth of 2.5% for 2015, and 2.3% in 2016, based on the July Global Economic Outlook Report. The agency believes annual UK unemployment rates will be 5.4% in 2015 and 5.3% in 2016.

Fitch is maintaining its lifetime base case assumptions for the transaction at their closing levels.

RATING SENSITIVITIES
Expected impact on the note rating of increased defaults (class A/B)
Current rating: 'AAAsf'/'A+sf'
Increase base case defaults by 25%: 'AAAsf'/'A+sf'

Expected impact on the note rating of reduced recoveries (class A/B):
Current rating: 'AAAsf'/'A+sf'
Reduce base case recovery by 25%: 'AAAsf'/'A+sf'

Expected impact on the note rating of increased defaults and reduced recoveries (class A/B):
Current rating 'AAAsf'/'A+sf'
Increase default base case by 25%; reduce recovery base case by 25%: 'AAAsf'/'A+sf'''

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

DATA ADEQUACY
Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pool and the transaction. There were no findings that were material to this analysis. Fitch has not reviewed the results of any third party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring.

Prior to the transaction closing, 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.

Overall Fitch's assessment of the 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.
- Monthly investor reports provided by VWFS UK Limited, up to 31 July 2015 (August reporting date)
-Updated loan by loan data file with cut-off date 31 July 2015