TRIS Rating has assigned a “T1+” rating to the proposed issue of up to Bt80,000 million in guaranteed debentures under the short-term debenture program No. 1/2558 of Toyota Leasing (Thailand) Co., Ltd. (TLT or Issuer). At the same time, TRIS Rating has affirmed the ratings of TLT’s guaranteed debentures, issued under its Bt60,000 million medium-term debenture program, at “AAA”. TRIS Rating has also affirmed the ratings of TLT’s guaranteed debentures under the short?term debenture program No. 2/2557 at “T1+”. The outlook remains “stable”.
Both the short? and medium?term debentures of TLT are guaranteed by Toyota Motor Finance (Netherlands) B.V., (TMF or Guarantor). TMF is a wholly-owned subsidiary of Toyota Financial Service Corporation (TFS), which is 100% held by Toyota Motor Corporation (TMC), the ultimate parent company. All three companies, TMF, TFS, and TMC, are rated “AA?” by Standard & Poor’s and “Aa3” by Moody’s Investors Service (Moody’s), with short?term issue ratings at “A?1+” by Standard and Poor’s and at “P?1” by Moody’s. The ratings of TLT’s short? and medium?term debentures reflect the unconditional and irrevocable guarantee given by TMF, whose rating is based on the credit strength of TMC. Under this guarantee structure, TMC has provided a Credit Support Agreement (CSA) to TFS, which has in turn provided a CSA to TMF. Under the terms of the CSA, TMC will provide sufficient liquidity for the obligations of bonds, debentures, and commercial papers of both subsidiaries, TFS and TMF. TMC will also provide sufficient liquidity for TMF’s guarantee obligations. The guarantee is governed by the Dutch law and is unconditional and irrevocable. The guarantee provides punctual payment for the debentureholders of all sums payable by TLT. For the guarantee of the medium?term debentures, the obligations of TMF rank at least pari passu with all other present and future unsecured and unsubordinated indebtedness of TMF. The guarantee cannot be amended or terminated without the consent of both the debentureholders’ representatives and the Guarantor, TMF.
The Guarantor will not be under any obligation to make payment for the Issuer’s failure to pay as a result of any of the following actions by any Thai government agency: (1) interruption of payment by causing Issuer to be unable to transfer monies or to convert foreign currency to the Registrar or debentureholders to pay debt obligations; (2) causing the transfer of majority shareholding in, or control over, the Issuer to a third?party not associated with the Toyota Group; (3) expropriation or nationalization of at least 10% of the net value of hire purchase receivables of the Issuer and its subsidiaries; and (4) expropriation or nationalization that has the effect of preventing the Issuer and its subsidiaries from carrying on business. TRIS Rating believes that the above events are highly unlikely to occur.
The “stable” outlook reflects the creditworthiness of TLT’s ultimate parent, TMC. TMC’s current international scale company ratings of “AA?/Stable” assigned by Standard and Poor’s and “Aa3/Stable” by Moody’s still reflect TMC’s relatively strong credit profile when compared with a “AAA” rating, the highest national scale rating, based on TRIS Rating’s database of rated companies in Thailand. The rating and/or outlook for TLT’s guaranteed debentures could be revised should there be any changes in TMC’s creditworthiness.
TMC reported that it sold 8.972 million units of car in fiscal year 2015 (FY2015: April 2014 - March 2015), dropping slightly from the level of 9.116 million units sold in FY2014. The unit sales were 2.114 million units for the first quarter of FY2016, compared with the level at 2.241 million units for the same period in FY2015. Despite the drops in unit sales, TMC’s financial performance has been driven by the depreciation of yen since late 2012. TMC’s net income improved to 2,173 billion yen in FY2015, substantially up from the 1,823 billion yen in FY2014. Net income continued to improve to 646 billion yen for the first quarter of FY2016, rising by 10% from the same period of FY2015. TMC’s market and competitive positions remain strong, supported by its broad product lines, wide geographic market coverage, technological leadership, and low level of financial risk.
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