Toyota finance unit seeks Japan-backed loans, reports say

Toyota finance unit seeks Japan-backed loans, reports say

Automotive News March 3, 2009 - 12:37 am ET

TOKYO (Reuters) -- A Toyota Motor Corp. financial services unit has applied for about $2 billion in loans backed by the Japanese government as the financial crisis threatens funding at the world's biggest automaker, state TV broadcaster NHK said today.

With credit markets worldwide in turmoil, Toyota may be the first of a string of Japanese companies with high credit ratings to turn to state-backed loans prior to the closing of books for the business year at the end of March.

Wholly owned car-loan financing firm Toyota Financial Services has asked the state-backed Japan Bank for International Cooperation for a

200 billion yen ($2.1 billion) loan to help cover rising credit costs in the United States, NHK said without saying where it got the information. Bloomberg News also reported the request, citing Toyota Financial spokesman Toshiaki Kawai, without confirming the timing or amount.

Credit default swaps on automakers in Asia and Europe are at steep discounts as investors worry about liquidity and short-term debt maturities at carmakers' financial services operations.

Moody's implied ratings for Toyota and American Honda Finance Corp., based on credit default swaps, are both many notches lower than the agency's actual ratings for the two companies.

Carmakers worldwide are reeling from a collapse in consumer demand since late last year that has forced them to cut production and shed jobs.

Finance company GMAC, the main lender to federal bailout recipient General Motors, has been hit by losses in its auto and mortgage units. The finance unit won a $6 billion government rescue in December and a ticket to tap lower-cost funding.

Toyota faces an operating loss of 450 billion yen for the year to March, as sales tumble in its biggest markets of Japan, North America and Europe. It will be the automaker's first operating loss in seven decades.

Toyota Financial Services, whose assets totaled 14.3 trillion yen ($147 billion) as of the end of September, provides car leases around the world and home loans and asset management services in Japan.

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