TRIS Rating affirms the ratings on Toyota Leasing (Thailand) Co., Ltd.?s (TLT or Issuer) guaranteed debentures, issued under its THB60 billion Medium-term Debenture Program, at ?AAA?, as well as the ratings on TLT?s long- and short-term guaranteed debentures, issued under its THB130 billion Thai Baht Debentures Programme in the year 2018, THB130 billion Thai Baht Debentures Programme in the year 2020, and THB130 billion Thai Baht Debentures Programme in the year 2022 at ?AAA? and ?T1+?.
TRIS Rating also assigns the ratings on TLT?s proposed issue of up to THB5 billion long- and short-term guaranteed debentures due within five years under the Digital Infrastructure Project (DIF), at ?AAA? and ?T1+?.
All rated debentures of TLT are guaranteed by Toyota Motor Finance (Netherlands) B.V. (TMF or Guarantor). TMF is a wholly-owned subsidiary of Toyota Financial Services Corporation (TFS), which is in turn wholly owned by Toyota Motor Corporation (TMC), the ultimate parent company in Japan. All three companies, TMF, TFS, and TMC, are rated ?A+? with a ?stable? outlook, and their short?term issue ratings are rated ?A?1+? by S&P Global Ratings.
We believe TMC will maintain its solid market position in the automotive industry, backed by its broad product line-up, global market coverage, and technological leadership. TMC has sustained a global market share in auto sales of about 12% over the past few years. The company reported sales of 8.23 million units in the fiscal year 2022 (FY2022: April 2021-March 2022), increasing by 8% year-on-year (y-o-y). Sales for the first nine months of FY2023 (April-December 2022) also rose by 6% y-o-y to 6.4 million units. This was driven by stronger demand in the global auto industry due to economic recovery.
We expect TMC will maintain its strong earnings performance over the next few years through ongoing cost-reduction efforts and by continuously launching new vehicle models. TMC?s operating income improved to JPY3.0 trillion in FY2022, up by 36% from JPY2.2 trillion in FY2021 due to a gradual recovery in vehicle sales and the company?s cost-reduction strategy. However, operating income for the first nine months of FY2023 was JPY2.1 trillion, dropping by 17% from the same period of FY2022. This was mainly due to the effects of foreign exchange rates and rising raw material prices.
TMC has maintained conservative financial policies and low level of financial risk. It has a solid liquidity profile with significant net cash position, considerable reserves of cash, and high-quality liquid assets. TMC also has diversified funding sources domestically and internationally including bank loans, bonds, and commercial papers (CPs).
The ratings on TLT?s short? and long-term debentures reflect the unconditional and irrevocable guarantee provided 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 CPs of both subsidiaries, TFS and TMF. TMC will also provide sufficient liquidity for TMF?s guarantee obligations.
The guarantee is governed by Dutch law and is unconditional and irrevocable. The guarantee covers punctual payments to the debentureholders of all sums payable by TLT. For the guaranteed 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:
(1) by any Thai government agency: (i) 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; (ii) causing the transfer of majority shareholding in, or control over, the Issuer to a third?party not associated with the Toyota Group; (iii) expropriation or nationalization of at least 10% of the net value of hire purchase receivables of the Issuer and its subsidiaries; and (iv) expropriation or nationalization that has the effect of preventing the Issuer and its subsidiaries from carrying on business.
(2) by any Sanction Authority: if the Guarantor is prevented to pay under any trade, economic or financial sanction laws, regulations, embargoes or restrictive measures administered, enacted or enforced by a Sanction Authority.
TRIS Rating believes it is highly unlikely that any of the above events would occur.
BASECASE ASSUMPTIONS
? TMC?s ratings assigned by S&P Global Ratings will be maintained.
? There will be no change to the unconditional and irrevocable guarantee by TMF on TLT?s debentures.
RATING OUTLOOK
The ?stable? outlook reflects the creditworthiness of TMF, TLT?s Guarantor. TMF?s credit profile reflects the creditworthiness of the ultimate parent, TMC. TMC?s current international-scale company rating of ?A+/Stable? assigned by S&P Global Ratings continues to reflect TMC?s credit strengths.
RATING SENSITIVITIES
The ratings and/or outlook on TLT?s guaranteed debentures could be revised downward in the event of a significant weakening in TMC?s creditworthiness.
RELATED CRITERIA
- Group Rating Methodology, 7 September 2022
- Key Financial Ratio and Adjustments for Corporate Issuers, 11 January 2022
- Issue Rating Criteria, 15 June 2021
- Nonbank Financial Institution Methodology, 17 February 2020
- Rating Methodology ? Corporate, 26 July 2019
Toyota Leasing (Thailand) Co., Ltd. (TLT)
Issue Ratings:
THB60,000 million guaranteed debentures under Medium-term Debenture Program:
- TLT235A: THB1,500 million guaranteed debentures due 2023 AAA
- TLT24OA: THB3,500 million guaranteed debentures due 2024 AAA
- TLT255A: THB1,000 million guaranteed debentures due 2025 AAA
Long-term guaranteed debentures AAA - TLT237A: THB2,100 million guaranteed debentures due 2023 AAA Short-term guaranteed debentures T1+ THB130,000 million guaranteed debentures under Thai Baht Debentures Programme in the year 2020: Long-term guaranteed debentures AAA - TLT234A: THB3,000 million guaranteed debentures due 2023 AAA - TLT235B: THB2,000 million guaranteed debentures due 2023 AAA - TLT23NA: THB2,200 million guaranteed debentures due 2023 AAA - TLT23NB: THB1,000 million guaranteed debentures due 2023 AAA - TLT242A: THB1,800 million guaranteed debentures due 2024 AAA - TLT243A: THB3,000 million guaranteed debentures due 2024 AAA - TLT245A: THB2,910 million guaranteed debentures due 2024 AAA - TLT248A: THB2,600 million guaranteed debentures due 2024 AAA - TLT24NA: THB3,000 million guaranteed debentures due 2024 AAA - TLT253A: THB1,500 million guaranteed debentures due 2025 AAA - TLT255B: THB2,900 million guaranteed debentures due 2025 AAA - TLT256A: THB2,580 million guaranteed debentures due 2025 AAA - TLT258A: THB1,200 million guaranteed debentures due 2025 AAA - TLT258B: THB2,000 million guaranteed debentures due 2025 AAA - TLT263A: THB1,500 million guaranteed debentures due 2026 AAA - TLT265A: THB2,900 million guaranteed debentures due 2026 AAA - TLT285A: THB1,290 million guaranteed debentures due 2028 AAA Short-term guaranteed debentures T1+ THB130,000 million guaranteed debentures under Thai Baht Debentures Programme in the year 2022: Long-term guaranteed debentures AAA - TLT24DA: THB1,400 million guaranteed debentures due 2024 AAA - TLT252A: THB3,297 million guaranteed debentures due 2025 AAA - TLT25DA: THB5,100 million guaranteed debentures due 2025 AAA - TLT262A: THB3,568 million guaranteed debentures due 2026 AAA Short-term guaranteed debentures T1+ Up to THB5,000 million guaranteed debentures due within 5 years under Digital Infrastructure Project (DIF): Long-term guarantee debentures AAA Short-term guarantee debentures T1+ Rating Outlook: Stable TRIS Rating Co., Ltd./www.trisrating.com Contact: santaya@trisrating.com, Tel: +66 0 2 098 3000/Silom Complex Building, 24th Floor, 191 Silom Road, Bangkok 10500, Thailand ? Copyright 2023, TRIS Rating Co., Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution or storing for subsequent use for any purpose, in whole or Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution, or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited, without the prior written permission of TRIS Rating Co., Ltd. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient?s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any errors or omissions, the result obtained from, or any actions taken in reliance upon such information. All methodologies used can be found at www.trisrating.com/rating-information/rating-criteria