Toyota picking up speed
Toyota Finance Australia (TFA) has had a growing presence in Australian and offshore debt markets in recent years. The company’s Sydney-based treasurer, Carol Lydford, discusses a recently struck alliance which is expected to facilitate an increased debt-funding requirement, including a possible Australian securitisation debut.
Toyota Motor Corporation (Toyota) entered into a strategic partnership with Mazda Corporation (Mazda) in 2017. How has this affected loan origination and business growth in Australia?
Since the local alliance, we have been setting up the framework and infrastructure and now have a significant number of Mazda dealers on board. We also executed the first Mazda Finance consumer contract in July. This is organic growth which will ramp up over the next few years and will result in substantial growth to the asset portfolio, and subsequently the debt portfolio, of TFA.
How has TFA’s funding strategy evolved, especially when it comes to diversity of sources?
There can be constraints when issuing into the domestic market regarding achieving our volume aspirations while maintaining competitive pricing. Given the increasing size of our annual funding task, we need to look to offshore markets with deeper liquidity – such as Europe, as we did in April this year.
We also maintain a range of financing products in various markets. We have three very active commercial-paper programmes issuing into Australia, Europe and the US.
We also have bilateral bank loans and securitisation financing. We are looking to expand our securitisation programme in early 2020, including potential public securitisation transactions in the future.
What would be the trigger for TFA to enter the public asset-backed securities market?
TFA tends to issue its senior-unsecured deals at tenor that is also ideal for bank-debt funding – in the short-to-mid curve. What are your considerations for balancing bank and public debt funding?
Our perspective on the domestic market at present is that the 3-5 year tenor range is looking ideal for TFA’s typical issuance. When we went to the euro market in April 2019, we deliberately chose two- and five-year tranches to achieve greater volume while managing our maturity profile and refinancing considerations. This strategy also resulted in more diverse investor participation, as many investors had a preference for either the shorter or longer tenor.
We want our bonds to gain momentum as a primary-market offering and then trade well for investors in the secondary market. So we try to issue where demand is strongest rather than being fixated on a certain tenor.
How does TFA seek to differentiate itself from its auto-lending competitors, in a sector where there is activity from banks, other nonbanks and emerging lenders?
When it comes to our products, TFA is highly rated and has access to a variety of competitively priced finance products and markets. This, coupled with our unique value proposition through products such as Toyota Access, allows us to maintain a competitive edge on our main competitors.
nonbank Yearbook 2021
KangaNews's sixth annual guide to the business and funding trends in Australia's nonbank financial-institution sector.