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  5. Volkswagen Financial Services with a successful capital market start into the second half of the year

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Volkswagen Financial Services with a successful capital market start into the second half of the year

Volkswagen Financial Services successfully placed bonds in euros (EUR), Russian roubles (RUB) and pounds sterling (GBP) this week. "The attractive refinancing conditions in recent months were one reason for our very good half-year result. It is therefore all the more gratifying that we also started the second half of the year with successful issues in three major currencies," says Frank Fiedler, CFO of Volkswagen Financial Services AG and Chairman of the Board of Directors at Volkswagen Credit Inc. (USA). He adds: "The return of Volkswagen Credit Inc. to the American ABS market in June was also of great significance for the refinancing strength, as Volkswagen financial services' refinancing strategy is based on the broad use of instruments and currencies."

This week, Volkswagen Leasing GmbH achieved the transaction with the highest volume issued by Volkswagen Financial Services this year to date with three bonds totaling 2.5 billion euros. The transaction was oversubscribed more than three times. All bonds are guaranteed by Volkswagen Financial Services AG and rated BBB+ by Standard & Poor's and A3 by Moody's.

The shortest bond with a term of two and a half years bears interest at 0.25 percent p.a. with a volume of one billion euros, another bond with a term of four and a half years has a volume of 750 million euros and an annual interest rate of 1.00 percent. The bond, which has the longest term of seven years, also has a volume of 750 million euros and bears interest of 1.625 percent per year.

Volkswagen Financial Services N.V. placed a bond with a volume of 500 million GBP (approximately 556 million euros). The bond has a term of slightly more than three years and an interest rate of 1.875 percent per year. The issue was three times oversubscribed.

In addition, OOO Volkswagen Bank RUS has placed five billion RUB, approximately 70 million euros, on the Russian capital market. The rating agency Standard & Poor's rates the bond with the grade "BBB-" and thus at the level of the Russian Federation. The term of the bond is three years. The coupon is 8.60 percent per year and is payable semi-annually. Despite difficult market conditions in Russia, the transaction was successfully implemented after only a very small number of issuers had used the local capital market in recent months.

Corporate bonds make an elementary contribution to the funding volume of Volkswagen Financial Services. At the end of June 2018, bonds amounting to EUR 34.6 billion (at the end of 2017: EUR 32.7 billion) accounted for around 18 percent of the refinancing for the Volkswagen Financial Services division. Other significant constituents of the funding mix were Asset Backed Securities with a figure of EUR 37.3 billion (around 19 percent) and customer deposits with EUR 33.6 billion (also around 17 percent).