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Toyota Motor Corp.’s First U.S. Dollar-Denominated Straight Bonds In 20 Years Rated ‘AA-‘

          TOKYO (S&P Global Ratings) July 11, 2018--S&P Global Ratings today said it has assigned its 'AA-' long-term issue credit rating to Japan-based automaker Toyota Motor Corp.'s (AA-/Stable/A-1+) U.S. dollar-denominated unsecured straight bonds (see list below). We equalize the issue rating with the long-term issuer credit rating on the company. This reflects our view that Toyota's use of debt is low enough to limit the possibility that any lenders might be significantly disadvantaged relative to other lenders. 
          The bonds are foreign currency-denominated straight bonds and constitute the company's first issue of such bonds in about 20 years. Toyota will use the proceeds for general corporate purposes, including working capital and capital expenditures. S&P Global Ratings believes this procurement will help further diversify Toyota's funding sources through expansion of its investor base in overseas markets.
 
          Our long-term issuer credit rating on Toyota Motor reflects our view of the company's business risk profile, including:
          - A leading position in the global auto market, with a geographically diversified business base and a wide range of highly competitive products;
          - Strong leadership in technological development of electric vehicles, mainly hybrid cars; 
          - Close relationships with highly competitive and financially strong auto parts suppliers in the Toyota Motor group, which help the company build a solid record of cooperation with these companies in auto parts procurement and research and development (R&D);
          - Continued high profitability compared with peers thanks to constant efforts to reduce costs, despite susceptibility to risk of fluctuating currency values; and
          - Exposure to high cyclical risk and intense competition in sales and development in the global auto industry.
 
          Our long-term issuer credit rating on Toyota Motor also reflects our view of its financial risk profile, including: 
          - Extremely strong major financial ratios, supported by strong cash flow generation and low debt;
          - A long record of a positive net cash position, excluding captive finance operations;
          - Likely continued positive free cash flow despite an anticipated increase in R&D costs, capital expenditures, and shareholder rewards; and
          - Control, at a low level, of risks related to assets and leverage in its captive finance operations thanks to progress dealing with losses on residual value in its U.S. business.