Volkswagen Financial Services is launching its first new auto securitisation transaction since the company was mired in an emissions scandal.
The benchmark euro-denominated issue, the size of which is yet to be disclosed, will be backed by German lease contracts, according to the company, writes Thomas Hale, capital markets reporter.
Securitisation is a process by which loans and leases are packaged into a special vehicle, which issues bonds to investors.
It is a key source of funding for Volkswagen's financial services arm, which provides customers and companies with credit, and had total assets of €137bn as of the end of 2014.
The deal is the first Volkswagen Financial Services has announced since late September - and will be closely watched by markets.
The company has previously stated its "frequent issuance pattern" would continue unchanged in the wake of the scandal.
Volkswagen's last ABS issue was an €816m Spanish transaction which priced the day after news of the emissions scandal broke.
Volkswagen is the largest issuer of auto asset-backed securities in Europe.
Rating agencies have been closely scrutinising risks associated with the securities, including the danger that secondhand car prices might fall sharply, and that customers might renege on their contracts.
Auto asset-backed securities are typically treated as a cash equivalent, and trade at extremely low spreads over euribor.
Volkswagen's ABS spreads have doubled over recent weeks to around 60 basis points over euribor, according to market participants.
The European Central Bank has also suspended its purchase of Volkswagen's ABS, which it was buying under its ABS asset purchase programme, as a result of the scandal.