Toyota Group eying bond, ABS issuance in China

Toyota Financial Services Corp. is considering issuing Chinese yuan-denominated corporate bonds and asset-backed securities in China, informed sources told Jiji Press Tuesday.

The unit of Toyota Motor Corp. has already sounded out Chinese regulatory authorities about possible issuance of the bonds and the securities backed by automobile loan claims, the sources said.

At present, Toyota Financial procures funds in China from local banks. The firm hopes to improve the competitiveness of its financial services there by diversifying its fund-raising vehicles.

Initially, Toyota Financial will issue yuan bonds and asset- backed securities totaling 10 billion to 15 billion yen. The issue amount will be increased in the future.

The Toyota group hopes that the step will help shore up its auto sales in China, whose presence is increasing as the U.S. market is contracting severely amid the economic slump.

Given most of foreign companies operating in China rely on bank loans, it is extremely unusual for a company to issue asset-backed securities, which require highly sophisticated financial technologies, market sources said.

They also said Toyota Finance will probably be the first private- sector firm to issue yuan-based corporate bonds, adding if Toyota successfully raises funds through the bond issuance, other foreign firms would follow suit.

The Toyota group's new auto sales in China totaled 580,000 units in 2008, up 17 pct from the previous year and about double the level in 2006.

China's auto market has not been immune to the global economic downturn. But in January, China replaced the United States as the world's largest auto market in terms of monthly sales.

Toyota Financial set up a wholly owned subsidiary in Beijing in 2005. The subsidiary currently operates in 18 cities, mainly in the coastal regions, and is set to expand into inland cities. In two years, it plans to hire 300 more staff.