May 29, 2014 / 9:17 AM / in 4 years

RPT-Fitch Rates Volkswagen's Hybrid Notes 'BBB+'

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May 29 (Reuters) - (The following statement was released by the rating agency)

Fitch Ratings has assigned Volkswagen’s (A/Stable/F1) undated subordinated notes a ‘BBB+’ rating. The notes were issued by Volkswagen International Finance NV.


The hybrid notes are rated two notches below Volkswagen’s Long-term Issuer Default Rating (IDR) of ‘A’, reflecting the securities’ increased loss severity and heightened risk of non-performance relative to senior obligations. The hybrid notes are subordinated to Volkswagen’s senior unsecured debt and are unconditionally and irrevocably guaranteed by Volkswagen. Coupon payments can be deferred at the issuer’s discretion. The notching approach is in accordance with Fitch’s criteria, “Treatment and Notching of Hybrids in Nonfinancial Corporate and REIT Credit Analysis” on

The securities qualify for 50% equity credit as they meet Fitch’s criteria with regard to subordination, effective maturity of at least five years, full discretion to defer coupons for at least five years and limited events of default, as well as the absence of material covenants and look-back provisions.


The securities’ rating is sensitive to changes in Volkswagen’s IDR.

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