TFS details $1.6B green bond for financing of efficient vehicles
Toyota Financial Services (TFS) is continuing to cultivate its portfolio of fuel-efficient vehicles.
Last week, the captive issued its latest asset-backed green bond, reinforcing the company’s longstanding commitment to the sale of environmentally friendly vehicles.
TFS said in a news release that net proceeds from the $1.6 billion bond offering will be used for the acquisition of new retail installment sales contracts and operating lease contracts financing Toyota passenger vehicles from model year 2020 or later and which meet each of the three eligibility criteria:
— Be a hybrid electric vehicle, plug-in hybrid electric vehicle, fuel cell electric vehicle or battery electric vehicle
— The base trim model of the vehicle must have a maximum tailpipe carbon dioxide emission of not more than 110 grams per kilometer (approximately 177 grams per mile)
— The vehicle must have a smog rating of “7” or better (“10” being the cleanest), as determined by the U.S. Environmental Protection Agency
For this newest offering, TFS said it set the highest eligibility requirements for vehicle qualification of any of its green bonds to date. There are currently six eligible vehicle models in the Toyota lineup, including Camry Hybrid, Corolla Hybrid, Prius, Prius Prime, RAV4 Prime and Mirai.
TFS said it revolutionized the green bond market by introducing its first-ever asset-backed green bond in 2014. The company followed with a series of additional asset-backed green bonds and unsecured U.S. dollar and Euro-denominated green bonds.
The captive indicated this issuance marks the company’s sixth green bond. Officials explained TFS Green Bonds, which have a cumulative total of $7.6 billion, are an important component of the company’s diversified funding program and serve to enhance Toyota’s extensive commitment to environmental causes.
“TFS Green Bonds support the sale of environmentally friendly Toyota vehicles and provide an appealing option for socially-conscious investors,” said Cindy Wang, TFS group vice president of treasury. “Our latest green bond has our most rigorous eligibility criteria yet, demonstrating our commitment to continuous improvement in this space.”
By 2025, Toyota’s goal is to have 40% of new-vehicle sales be electrified models. By 2030, the company expects that level to increase to nearly 70%.
Globally, Toyota calculated this commitment to alternative powered vehicles has resulted in the avoidance of an estimated 140 million tons of greenhouse gas (GHG) into the atmosphere since 1997.
The TFS green bond program was reviewed by Sustainalytics, a leading global provider of environmental, social and corporate governance research, ratings and analytics.
The lead underwriters of the green bond are Citigroup, Credit Agricole Securities, SMBC Nikko and TD Securities. Citigroup and Credit Agricole Securities are also joint green bond structuring advisors on this transaction.
For additional details about Toyota’s environmental strategy and performance across four key focus areas including carbon, water, materials and biodiversity and related outreach activities, visit www.toyota.com/usa/environmentreport/.
For more information on TFS’ Capital Markets programs, visit www.toyotafinancial.com.