OREANDA-NEWS. Fitch Ratings has assigned Driver UK Master S.A. - Compartment 2 new notes final ratings as follows:

GBP300m Class A Series 2015-1, due June 2024: 'AAAsf'; Outlook Stable
GBP150m Class B Series 2015-1, due June 2024: 'A+sf'; Outlook Stable

Fitch has simultaneously affirmed the existing notes of Driver UK Master S.A. - Compartment 2, as follows:

GBP285.9m Class A Series 2013-1, due June 2024: 'AAAsf'; Outlook Stable
GBP285.9m Class A Series 2013-2, due June 2024: 'AAAsf'; Outlook Stable
GBP116m Class A Series 2013-3, due June 2024: 'AAAsf'; Outlook Stable
GBP200m Class A Series 2013-4, due June 2024: 'AAAsf'; Outlook Stable
GBP425m Class A Series 2013-5, due June 2024: 'AAAsf'; Outlook Stable
GBP50m Class A Series 2013-6, due June 2024: 'AAAsf'; Outlook Stable
GBP524m Class A Series 2013-7, due June 2024: 'AAAsf'; Outlook Stable
GBP175m Class A Series 2013-8, due June 2024: 'AAAsf'; Outlook Stable
GBP90m Class A Series 2013-10, due June 2024: 'AAAsf'; Outlook Stable
GBP100m Class A Series 2014-1, due June 2024: 'AAAsf'; Outlook Stable
GBP200m Class A Series 2014-2, due June 2024: 'AAAsf'; Outlook Stable
GBP200m Class A Series 2014-3, due June 2024: 'AAAsf'; Outlook Stable
GBP64.1m Class B Series 2013-1, due June 2024: 'A+sf'; Outlook Stable
GBP64.1m Class B Series 2013-2, due June 2024: 'A+sf'; Outlook Stable
GBP124m Class B Series 2013-3, due June 2024: 'A+sf'; Outlook Stable
GBP100m Class B Series 2014-1, due June 2024: 'A+sf'; Outlook Stable
GBP694.1m subordinated loan: not rated

The transaction is a securitisation of a portfolio of UK auto loan receivables originated by Volkswagen Financial Services (UK) Limited (VWFS). Fitch initially rated the Master structure in November 2013; we affirmed/assigned the ratings above with respect to an extension of the programme's replenishment period by seven months, compared with an original replenishment phase of one year.

The ratings are based on Fitch's assessment of VWFS's origination and servicing procedures, Fitch's expectations of asset performance, the available credit enhancement (CE), and the transaction's legal structure.

KEY RATING DRIVERS
Used Car Price Exposure
The issuer is exposed to the risk of declines in used-car prices, as regards both residual values (RV) and voluntary terminations (VT). Fitch has assumed a combined RV and VT loss of 21% in a 'AAAsf' scenario and 14.6% in an 'A+sf' scenario. Under a personal contract purchase (PCP) loan, borrowers face a balloon payment at maturity if they choose not to return the vehicle.
PCP and hire purchase (HP) loans are regulated by the Consumer Credit Act, so borrowers can terminate contracts without further repayment obligations once 50% of the total amount due is paid.

Assumption Adjustment for Affected Diesels
In the pool, 29% of financed vehicles (by volume) have been reported as being affected by VW's emission test manipulation. To assess the impact of the expected negative effect on used car prices, Fitch has incorporated additional stresses in its recovery rate and VT/RV assumptions for affected vehicles. We further stress-tested the notes' rating sensitivity with respect to an increasing share of affected vehicles.

Technical Fix Determines Risk
According to transaction counsel, if the affected cars cannot be fully repaired, this could result in a legally permissible reduction of loan instalments or the termination of financing contracts by obligors. Fitch understands from transaction counsel that such instances would be considered as a breach of representation and warranties made to the issuer by the seller if they materially and adversely affect the interests of the noteholders. This could increase credit exposure to the seller and ultimately VW.

Limited Revolving Period Risk
The structure features a short revolving period of seven months. Fitch modelled some migration of the initial pool towards more adverse risk characteristics, but considers the risk of economic deterioration, or a material shift in VWFS's origination mix during the replenishment phase to be limited.

TRANSACTION STRUCTURE
The originator is a wholly-owned subsidiary of Volkswagen Financial Services AG which itself is a subsidiary of Volkswagen AG (BBB+/Negative/F2). The issuer entered into interest rate swap agreements at closing to hedge the mismatch between the fixed-paying assets and the floating-rate notes. Interest rate hedging is provided by six different swap counterparties, which are all eligible with respect to Fitch's counterparty criteria.

As of the initial pool's cut-off date, the weighted average remaining term of the portfolio is 31 months. The major part of the initial portfolio comprises new vehicle loans (74%) with the remainder being used vehicle loans. PCP loans account for almost 90% of the initial portfolio, and HP loans represent the remaining 10% of the initial collateral.

A new issue report, including further information on transaction related stress, key rating drivers and rating sensitivities, as well as material sources of information that were used to prepare the final rating, is available at www.fitchratings.com or by clicking the link above.

RATING SENSITIVITIES
Expected impact on the note ratings of increased defaults (class A/class B):
Current ratings: 'AAAsf'/'A+sf'
Increase base case defaults by 10%: 'AAAsf' / 'A+sf'
Increase base case defaults by 25%: 'AAAsf' / 'A+sf'
Increase base case defaults by 50%: 'AAAsf' / 'A+sf'

Expected impact on the note ratings of reduced recoveries (class A/class B):
Current ratings: 'AAAsf'/'A+sf'
Reduce base case recovery by 10%: 'AAAsf' / 'A+sf'
Reduce base case recovery by 25%: 'AAAsf' / 'A+sf'
Reduce base case recovery by 50%: 'AAAsf' / 'A+sf'

Expected impact on the note ratings of increased market value stress (class A/class B):
Current ratings: 'AAAsf'/'A+sf'
Increase market value stress by 10%: 'AAAsf' / 'A+sf'
Increase market value stress by 25%: 'AAAsf' / 'A+sf'
Increase market value stress by 50%: 'AA+sf' / 'A-sf'

Expected impact on the note rating of increased defaults and market value stress and reduced recoveries (class A/class B):
Current ratings: 'AAAsf'/'A+sf'
Increase default base case and market value stress by 10%; reduce recovery base case by 10%: 'AAAsf' / 'A+sf'
Increase default base case and market value stress by 25%; reduce recovery base case by 25%: 'AA+sf' / 'Asf'
Increase default base case and market value stress by 50%; reduce recovery base case by 50%: 'AA-sf' / 'BBB+sf'

DUE DILIGENCE USAGE
Fitch was provided with a third party asset portfolio assessment in relation to this rating action.

DATA ADEQUACY
Fitch reviewed the results of the third party assessment conducted on the asset portfolio information, which indicated no adverse findings material to the rating analysis. Fitch believes the sample size and relevance of the tested fields suggest the data provided by the originator for assigning the ratings was of acceptable quality.

Fitch conducted a review of a small targeted sample of VWFS '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:
- Transaction pool stratification data provided by VWFS as of cut-off date 31 October 2015 and loan-by-loan information as of cut-off date 31 August 2015.
- Dynamic quarterly delinquency data from March 2008 to August 2015, for the overall loans book and split into four sub-pools (PCP new, PCP used, HP new, HP used).
- Quarterly static default vintage data, for the overall book and split into the four different sub-pools. The data provided spans the period between 3Q02 and 2Q15.
- Monthly recovery data, for the overall book, split into proceeds from vehicle remarketing and cash proceeds. The data provided spans the period between August 2002 and June 2015.
- Dynamic monthly prepayment data from January 2004 to August 2015.
- Monthly investor reports from November 2013 to October 2015.

REPRESENTATIONS AND WARRANTIES
A comparison of the transaction's Representations, Warranties & Enforcement Mechanisms to those typical for the asset class is available by accessing the appendix that accompanies the new issue report, dated 25 November 2015 at www.fitchratings.com. In addition refer to the special report "Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions" dated 12 June 2015 available on the Fitch website.