Toyota Motor Corp., the world?s largest automaker, plans to issue $1.6 billion of debt in two parts through its U.S. finance unit after saying yesterday that sales in the country fell for a third straight month.
Toyota Motor Credit Corp. may sell 5- and 10-year notes as soon as today, according to a person familiar with the transaction. It?s the unit?s first benchmark offering, typically at least $500 million, since August, according to data compiled by Bloomberg.
Toyota?s U.S. sales fell 5.5 percent in December and slipped 0.4 percent for the year, while industrywide 2010 deliveries increased 11 percent, according to researcher Autodata Corp. The Toyota City, Japan-based carmaker fell behind Ford Motor Co. into third place in annual U.S. sales, hurt by more than 8 million recalls related to unintended acceleration. Ford had trailed since 2007.
The offering is part of Toyota Motor Credit?s strategy to diversify its funding in ?response to the recent credit crisis,? analysts at debt-research firm CreditSights Inc. wrote in a Dec. 28 note. ?Toyota has not erred on the side of compromising TMCC?s credit profile to inflate market share at this point in the cycle.?
The $900 million of 5-year notes may pay 70 basis points more than similar-maturity Treasuries, and the $700 million of 10-year debt may pay an 80 basis-point spread, said the person familiar with the transaction, who declined to be identified because the terms aren?t set. A basis point is 0.01 percentage point.
New Models
Deliveries in the world?s second-largest auto market may rise 11 percent to 12.9 million this year, according to the average of 17 analyst estimates compiled by Bloomberg.
Toyota has said it will sell 11 new or refreshed models this year, including the Corolla small car, its second-best seller behind the Camry sedan.
?You need new product to get people into showrooms, to get them excited about Toyota again and to help them forget about the recall crisis,? David Whiston, an auto analyst at Morningstar Inc. in Chicago, said yesterday.
Proceeds from the debt sale will be used for general corporate purposes, said the person. The notes may be rated Aa2 by Moody?s Investors Service and an equivalent AA by Standard & Poor?s, according to the person.
Toyota Motor Credit sold $1 billion of three-year notes in its last sale, Bloomberg data show.
To contact the reporters on this story: Sapna Maheshwari in New York at sapnam@bloomberg.net; Craig Trudell in New York at Ctrudell1@bloomberg.net
To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net
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