Total JPY 300 billion shelf registration and total of JPY 130 billion senior unsecured bonds rated
Tokyo, March 12, 2021 -- Moody's Japan K.K. has assigned a (P)A1 senior unsecured
rating to the domestic shelf registration of Toyota Motor Corporation
(Issuer Rating A1). At the same time, Moody's has assigned
A1 senior unsecured rating to the new JPY denominated sustainability bonds
which are takedowns from the shelf registration. The outlook is
negative.
The specific shelf registration rated is:
- JPY 300 billion effective April 14, 2020
The specific notes rated are:
- JPY 70 billion, Series 26 senior unsecured bonds due 2026
- JPY 60 billion, Series 27 senior unsecured bonds due 2031
Toyota will use the bond proceeds towards social or green projects.
RATINGS RATIONALE
Toyota's A1 issuer rating considers its industry-leading market
position with a wide geographic reach, strong brand recognition
across a broad product line, and a well-established hybrid
vehicle franchise, which will help it meet carbon emissions requirements
in various markets. The rating also considers Toyota's track record
of operational rigor that has helped it maintain a higher margin than
that of its peers. The company also has a strong balance sheet
with substantial liquid assets.
At the same time, the ratings also reflect the uncertainty on the
evolving competitive landscape, including regulatory changes,
investments needed for alternative fuel and autonomous driving technologies,
and high competition.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
A rating upgrade is unlikely, because of the near-term impact
from the pandemic and the longer-term structural changes facing
the auto industry. Nevertheless, the rating could be upgraded
if (1) Toyota sustains the automotive segment's EBITA margin above 12%
and (2) sustains its debt/EBITDA significantly below 1.0x while
maintaining its net cash position.
Moody's will consider a downgrade if Toyota's balance sheet
and profitability weaken because of a decline in demand, with (1)
failure to restore its EBITA margin to the 7%-9%
range over the coming two years or (2) if debt/EBITDA is sustained above
2x.
The principal methodology used in these ratings was Automobile Manufacturer
Industry (Japanese) published in July 2017 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_196366.
Alternatively, please see the Rating Methodologies page on www.moodys.com
for a copy of this methodology.
Toyota Motor Corporation, headquartered in Toyota City, is
Japan's biggest automaker.
REGULATORY DISCLOSURES
For further specification of Moody's key rating assumptions and
sensitivity analysis, see the sections Methodology Assumptions and
Sensitivity to Assumptions in the disclosure form. Moody's
Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.
For ratings issued on a program, series, category/class of
debt or security this announcement provides certain regulatory disclosures
in relation to each rating of a subsequently issued bond or note of the
same series, category/class of debt, security or pursuant
to a program for which the ratings are derived exclusively from existing
ratings in accordance with Moody's rating practices. For ratings
issued on a support provider, this announcement provides certain
regulatory disclosures in relation to the credit rating action on the
support provider and in relation to each particular credit rating action
for securities that derive their credit ratings from the support provider's
credit rating. For provisional ratings, this announcement
provides certain regulatory disclosures in relation to the provisional
rating assigned, and in relation to a definitive rating that may
be assigned subsequent to the final issuance of the debt, in each
case where the transaction structure and terms have not changed prior
to the assignment of the definitive rating in a manner that would have
affected the rating. For further information please see the ratings
tab on the issuer/entity page for the respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this credit rating action,
and whose ratings may change as a result of this credit rating action,
the associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
The ratings have been disclosed to the rated entity or its designated
agent(s) and issued with no amendment resulting from that disclosure.
These ratings are solicited. Please refer to Moody's Policy
for Designating and Assigning Unsolicited Credit Ratings available on
its website www.moodys.com.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Moody's general principles for assessing environmental, social
and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1243406.
The Global Scale Credit Rating on this Credit Rating Announcement was
issued by one of Moody's affiliates outside the EU and is endorsed
by Moody's Deutschland GmbH, An der Welle 5, Frankfurt
am Main 60322, Germany, in accordance with Art.4 paragraph
3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies.
Further information on the EU endorsement status and on the Moody's
office that issued the credit rating is available on www.moodys.com.
The Global Scale Credit Rating on this Credit Rating Announcement was
issued by one of Moody's affiliates outside the UK and is endorsed
by Moody's Investors Service Limited, One Canada Square,
Canary Wharf, London E14 5FA under the law applicable to credit
rating agencies in the UK. Further information on the UK endorsement
status and on the Moody's office that issued the credit rating is
available on www.moodys.com.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Mariko Semetko
VP - Senior Credit Officer
Corporate Finance Group
Moody's Japan K.K.
Atago Green Hills Mori Tower 20fl
2-5-1 Atago, Minato-ku
Tokyo 105-6220
Japan
JOURNALISTS: 81 3 5408 4110
Client Service: 81 3 5408 4100
Mihoko Manabe
Associate Managing Director
Corporate Finance Group
JOURNALISTS: 81 3 5408 4110
Client Service: 81 3 5408 4100
Releasing Office:
Moody's Japan K.K.
Atago Green Hills Mori Tower 20fl
2-5-1 Atago, Minato-ku
Tokyo 105-6220
Japan
JOURNALISTS: 81 3 5408 4110
Client Service: 81 3 5408 4100