UPDATE 1-Volkswagen sets guidance on auto ABS -lead
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LONDON, Sept 10 (Reuters) - Volkswagen Financial Services, part of carmaker Volkswagen (VOWG.DE), has set guidance on a two-part security backed by German auto loans, an official at one of the banks managing the sale said on Wednesday.
Guidance on the triple-A rated 936 million euro ($1.33 billion) chunk of the security, named Driver Six, has been set at around 90 basis points over one-month Euribor.
The official said the 31 billion euro tranche, rated A+ by both Standard & Poor's and Fitch Ratings, and A1 by Moody's Investors Service, will be priced to yield 170 basis points over one-month Euribor.
BNP Paribas and SEB are managing the deal, of which the larger tranche will be eligible in the repo market, meaning the borrower keeps the securities on its balance sheet and can use them as collateral to obtain liquidity from central banks.
The European Central Bank (ECB) last week increased the safety margin it takes in valuing assets to 12 percent. Analysts said the changes would push up the overall cost of borrowing funds from the ECB.
Volkswagen's ABS deal, announced the day before the ECB toughened its repo rules, is its second this year, following Driver Five in January. (Reporting by Maya Thatcher, editing by Will Waterman)
