RAM Ratings has reaffirmed the AAA(s)/Stable/P1(s) ratings of Toyota Capital Malaysia Sdn Bhd’s (or the Company) RM1.0 billion Islamic CP/MTN Programme, as well as the respective AAA(s)/Stable/- and P1(s) ratings of the Company’s RM1.2 billion MTN Programme and RM600 million CP Programme.

Published on 28 October 2013

RAM Ratings has reaffirmed the AAA(s)/Stable/P1(s) ratings of Toyota Capital Malaysia Sdn Bhd’s (or the Company) RM1.0 billion Islamic CP/MTN Programme, as well as the respective AAA(s)/Stable/- and P1(s) ratings of the Company’s RM1.2 billion MTN Programme and RM600 million CP Programme. 
The enhanced ratings of Toyota Capital’s CP and MTN programmes reflect the credit strength of the irrevocable and unconditional guarantee extended by Toyota Motor Finance (Netherlands) BV (Toyota Netherlands), a fully owned subsidiary of Toyota Financial Services Corporation. We note that Toyota Netherlands has a credit-support agreement with Toyota Financial Services, which in turn has a similar contract with Toyota Motor Corporation of Japan (or the Group). Hence, the ultimate support from Toyota Motor enhances the credit profiles of the conventional debt facilities beyond Toyota Capital’s stand-alone credit strength. The ratings of the Islamic CP/MTN Programme are underpinned by a Purchase Undertaking from Toyota Capital, which is in turn backed by an irrevocable and unconditional guarantee from Toyota Netherlands, with ultimate credit support also stemming from Toyota Motor.
Toyota Motor’s strong business profile is underscored by its position as one of the world’s top vehicle manufacturers. The Group was the world’s largest car maker in 2012, outselling General Motors Co and Volkswagen AG. The ratings also reflect Toyota Motor’s strong financial profile and superior liquidity. The net gearing ratio of the Group’s automotive division stood at a mere 0.02 times as at end-March 2013 while its funds from operations debt cover had risen to a robust 1.19 times, backed by its strong performance in FY Mar 2013. These strengths are moderated by the keenly competitive global auto industry, the Group’s vulnerability to foreign-currency fluctuations and its weak positioning in emerging markets.
Ultimately owned by Toyota Motor, Toyota Capital is primarily a financier for Toyota vehicles in Malaysia. Its goal is to complement and support the sale of Toyota vehicles in the country. Operational support and financial flexibility from the Group are viewed to be strong; we expect Toyota Motor to provide the necessary support if the need arises.

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