Toyota Motor Credit Corp. (TMCC) said it made a complex financing move that the captive said was “demonstrating the company’s commitment to innovation and advancing its reputation as an industry leader.”

On Thursday, TMCC announced that it issued its first secured overnight financing rate (SOFR) medium-term note (MTN) transaction. The company indicated the one-year U.S. dollar-denominated issuance settled on Tuesday and raised $1.55 billion from institutional investors.

The development represents the company’s first SOFR-linked MTN transaction in the U.S. dollar market, and the first time a captive has issued a floating-rate MTN based on SOFR. Officials pointed out the London Interbank Offered Rate (LIBOR) is scheduled to discontinue after 2021, and many companies are looking to SOFR as an alternative reference rate to price U.S. dollar loans and derivatives.

Cindy Wang, group vice president of treasury for Toyota Financial Services — the finance and insurance brand for Toyota in the United States — explained the importance of the company’s SOFR issuance.

“Our broader corporate liquidity strategy is to ensure that we maintain the ability to fund assets and repay liabilities in a timely and cost-effective manner, even in adverse market conditions. This transaction supports our strategy by further diversifying our financing structures, and places us at the forefront of companies preparing for the discontinuation of the LIBOR index,” Wang said in a news release.

“We’re pleased that the offering was met with enthusiasm from large investors seeking exposure to SOFR. This strong demand allowed TMCC to upsize the deal significantly from its initial target," Wang added. “We appreciate the support from our investors and banking partners in making this SOFR issuance such a success.”

TMCC reiterated that it has long demonstrated the ability to pursue innovative funding solutions. The company previously offered diversity and inclusion bonds, what it believes was the auto industry’s first-ever green bond and a SOFR floating-rate commercial paper transaction to the short-term capital markets.

For more information on TFS’ capital markets programs, visit www.toyotafinancial.com.