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Rating Action:

Correction to Text August 17, 2009 Release: Moody's confirmed Volkswagen's A3 ratings with a stable outlook

09 Sep 2009

Approximately EUR 44.8 Billion of Debt Affected

Frankfurt, September 09, 2009 -- Correction to the issuer's debt list which incorrectly cited the confirmation of the P-2 short-term ratings which have not been affected by this rating action. Revised press release follows.

Moody's Investors Service confirmed Volkswagen's ("VW") A3 long term ratings with a stable outlook following the publication of a detailed plan for the combination of VW and Porsche. Today's rating action concludes the review for downgrade initiated May 8, 2009. The P-2 short-term ratings had not been affected.

Falk Frey, Senior Vice President and the lead analyst at Moody's for the European automotive sector, said: "The confirmation of VW's A3 ratings is based on Moody's view that the announced plan should allow VW to maintain its financial flexibility within the A3 rating category. This view is based on the expectation of a timely execution of the plan as well as the realization of capital collection via equity increases of at least €4.0 billion for VW preferred shares and approx. €6.0 billion at Porsche level."

The confirmation of the A3 rating is based on the assumption that Porsche's financing arrangements are secured until the completion of the merger with VW as well as the State of Qatar acquires the portfolio of options on VW shares from Porsche SE. Moody's understands that VW will not proceed with the fist step of the acquisition of Porsche's shares until these two agreements are finalized.

The A3 rating anticipates VW to still maintain financial ratios such as (i) a material positive operating income over the next few years; (ii) a positive free cash flow in the automotive business after dividend payout through the years 2009-2011 close to Euro 2 billion; (iii) as well as Net Debt/EBITDA not exceeding 2.5x in 2009 with continuous improvement over the following years to around 1.0x in 2011 and (iv) interest coverage ratio materially above to 1.0x in 2009, 2.0x in 2010 and at least 4.5x in 2011 (all ratios as adjusted by Moody's). Moody's notes that the put option that VW will have agreed with Porsche SE to sell its remaining 58% stake in Porsche AG to VW as well as the debt of Porsche AG have been added as adjustment to the VW debt figures for the intermediate term until full consolidation following the merger of VW and Porsche, given the intent of the parties to reach a full consolidation over time.

The stable outlook anticipates the timely and successful execution of the capital increase and is based on Moody's expectation of a smooth integration of both Porsche and Porsche Holding Salzburg into VW.

However, uncertainties about car demand in key Western European markets in 2010 remain given the phase out of most incentive programs. In Moody's view this will result in a market decline in Western Europe compared to the current year and likely impact also VW's operating performance. Consequently, Moody's cautions that weaker than anticipated earnings or cash generation could make it challenging for VW to achieve the above outlined financial metrics. Concerns that VW might fail to achieve the required metrics would certainly put pressure on the A3 ratings and the stable outlook.

Outlook Actions:

..Issuer: VW Credit Canada, Inc.

....Outlook, Changed To Stable From Rating Under Review

..Issuer: VW Credit, Inc.

....Outlook, Changed To Stable From Rating Under Review

..Issuer: Volkswagen Aktiengesellschaft

....Outlook, Changed To Stable From Rating Under Review

..Issuer: Volkswagen Financial Services AG

....Outlook, Changed To Stable From Rating Under Review

..Issuer: Volkswagen Financial Services Australia Ltd

....Outlook, Changed To Stable From Rating Under Review

..Issuer: Volkswagen Financial Services Japan Ltd.

....Outlook, Changed To Stable From Rating Under Review

..Issuer: Volkswagen Financial Services N.V.

....Outlook, Changed To Stable From Rating Under Review

..Issuer: Volkswagen Financial Services Singapore Ltd

....Outlook, Changed To Stable From Rating Under Review

..Issuer: Volkswagen Group Services SCS

....Outlook, Changed To Stable From Rating Under Review

..Issuer: Volkswagen International Finance N.V.

....Outlook, Changed To Stable From Rating Under Review

..Issuer: Volkswagen Investments Ltd.

....Outlook, Changed To Stable From Rating Under Review

..Issuer: Volkswagen Leasing GmbH.

....Outlook, Changed To Stable From Rating Under Review

Confirmations:

..Issuer: VW Credit Canada, Inc.

....Senior Unsecured Medium-Term Note Program, Confirmed at A3

....Senior Unsecured Regular Bond/Debenture, Confirmed at A3

..Issuer: VW Credit, Inc.

....Senior Unsecured Medium-Term Note Program, Confirmed at A3,

....Senior Unsecured Regular Bond/Debenture, Confirmed at A3

..Issuer: Volkswagen Aktiengesellschaft

....Issuer Rating, Confirmed at A3

....Senior Unsecured Medium-Term Note Program, Confirmed at A3

..Issuer: Volkswagen Canada, Inc.

..Issuer: Volkswagen Financial Services AG

....Senior Unsecured Medium-Term Note Program, Confirmed at A3

....Senior Unsecured Regular Bond/Debenture, Confirmed at A3

..Issuer: Volkswagen Financial Services Australia Ltd

....Senior Unsecured Medium-Term Note Program, Confirmed at A3

....Senior Unsecured Regular Bond/Debenture, Confirmed at A3

..Issuer: Volkswagen Financial Services Japan Ltd.

....Senior Unsecured Medium-Term Note Program, Confirmed at A3

....Senior Unsecured Regular Bond/Debenture, Confirmed at A3

..Issuer: Volkswagen Financial Services N.V.

....Senior Unsecured Medium-Term Note Program, Confirmed at A3

....Senior Unsecured Regular Bond/Debenture, Confirmed at A3

..Issuer: Volkswagen Financial Services Singapore Ltd

....Senior Unsecured Medium-Term Note Program, Confirmed at A3

..Issuer: Volkswagen Group Services SCS

....Senior Unsecured Medium-Term Note Program, Confirmed at A3

..Issuer: Volkswagen International Finance N.V.

....Senior Unsecured Medium-Term Note Program, Confirmed at A3

....Senior Unsecured Regular Bond/Debenture, Confirmed at A3

..Issuer: Volkswagen Investments Ltd.

....Senior Unsecured Medium-Term Note Program, Confirmed at A3

..Issuer: Volkswagen Leasing GmbH.

....Senior Unsecured Medium-Term Note Program, Confirmed at A3

....Senior Unsecured Regular Bond/Debenture, Confirmed at A3

..Issuer: Volkswagen Leasing, S.A. de C.V.

....Senior Unsecured Regular Bond/Debenture, Confirmed at Aaa.mx

The principal methodology used in rating Volkswagen was Moody's Global Automobile Manufacturer Industry Methodology, published December 2007 and available on www.moodys.com in the Rating Methodologies sub-directory under the Research & Ratings tab. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found in the Rating Methodologies sub-directory on Moody's website.

Moody's last rating action on Volkswagen placed VW's A3 long term ratings under review for possible downgrade following the announcement of a potential merger between VW and Porsche on May 8, 2009.

Volkswagen AG headquartered in Wolfsburg, Germany is Europe's largest car manufacturer, with a market share of 20.3% in Western Europe in 2008, and ranks number two globally with total annual unit sales of approx. 6.3 million vehicles. In 2008, Group revenues were approx. €114 billion.

Frankfurt
Falk Frey
Senior Vice President
Corporate Finance Group
Moody's Deutschland GmbH
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Paris
Eric de Bodard
Managing Director
Corporate Finance Group
Moody's France S.A.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Correction to Text August 17, 2009 Release: Moody's confirmed Volkswagen's A3 ratings with a stable outlook
No Related Data.
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