REG - Toyota Finance Aust. - Publication of Form 8-K

S&P GlobalAnnouncement

30/03/2020 15:50

RNS Number : 0942I
  
Toyota Finance Australia Ld
  
30 March 2020
  
 

Publication of Form 8-K - Toyota Motor Credit Corporation
Toyota Motor Credit Corporation ("TMCC") has published its Current Report on Form 8-K ("Form 8-K") which it has filed with the Securities and Exchange Commission on 27 March 2020, announcing that Toyota Motor North America, Inc. ("TMNA") has suspended production at all of its automobile and components plants in North America, including Canada, Mexico and the United States, from 23 March 2020 through 17 April 2020, with production currently expected to resume on 20 April 2020. However, no assurances can be made that production will resume on the date currently planned. This action was taken due to the increasing social and economic impact of the coronavirus ("COVID-19") pandemic, a significant decline in vehicle demand, and TMNA's desire to protect the health and safety of its team members, dealers, suppliers and communities. Toyota Motor Corporation ("TMC") has temporarily suspended production at selected plants in countries outside of North America. In addition, Toyota and Lexus dealer sales operations have been deemed non-essential businesses and forced to close pursuant to government decree in many states with additional states expected to follow.
On 26 March 2020, Moody's Investors Service, Inc. ("Moody's") downgraded to A1 from Aa3 the senior unsecured long-term ratings of TMC and its captive finance subsidiaries, including TMCC and Toyota Credit Canada Inc. ("TCCI") and Moody's Japan K.K. ("Moody's Japan") downgraded to A1 from Aa3 the senior unsecured long-term ratings of TMC and its captive finance subsidiaries, including Toyota Motor Finance (Netherlands) B.V. ("TMF"), Toyota Finance Australia Limited ("TFA"); and all ratings were placed by Moody's and Moody's Japan under review for further downgrade, including TMC's and TMCC's, TMF's, TCCI's and TFA's P-1 short-term ratings. The ratings outlook has changed to under review from negative. On 26 March 2020, S&P Global Ratings, acting through S&P Global Ratings Japan Inc. placed the AA- long-term ratings and the A-1+ short-term ratings of TMC and its subsidiaries, including TMCC, TMF, TCCI and TFA, on CreditWatch with negative implications.
Supplemental Risk Factor
In light of recent developments relating to COVID-19, TMCC is supplementing Item 1A. Risk Factors in the Annual Report on Form 10-K for the year ended 31 March 2019. The following risk factor should be read in conjunction with the risk factors described in TMCC's Annual Report on Form 10-K for the year ended 31 March 2019.
"We face various risks related to health epidemics and other outbreaks, which may have material adverse effects on our business, financial condition, results of operations and cash flows.
We face various risks related to health epidemics and other outbreaks, including the global outbreak of COVID-19. The COVID-19 pandemic, changes in consumer behavior related to illness, pandemic fears and market downturns, and restrictions intended to slow the spread of COVID-19, including quarantines, government-mandated actions, stay-at-home orders and other restrictions, have led to disruption and volatility in the global capital markets, which has increased our cost of capital and adversely affected our ability to access the capital markets.
In addition, the COVID-19 pandemic and restrictions intended to slow the spread of COVID-19 have adversely affected our business, and the business of our affiliate, TMNA, and our ultimate parent, TMC, in a number of ways. Similar to relief options we have previously offered to customers and dealers impacted by natural disasters such as hurricanes, floods, tornadoes and wildfires, we are offering payment relief options to customers and dealers impacted by COVID-19, including finance contract extensions, lease deferred payments, temporary interest deferrals for dealer floorplan financing, and principal payment deferral options for dealer real estate and working capital loans, and have temporarily suspended outbound collection activities in states with state-wide stay-at-home orders and repossession activities nationwide (collectively, the "COVID-19 Relief"). Unlike the relief options offered for natural disasters, which were limited to the affected geographies, the COVID-19 Relief is being offered nationwide due to the global impact of the COVID-19 pandemic, is expected to increase our credit and residual value losses, and will adversely affect our business, financial condition, results of operations, and cash flows. We have also temporarily transitioned the majority of our team members to remote work arrangements, and many Toyota and Lexus dealerships have temporarily closed and more may voluntarily close, or be mandated to close, in the near future. TMNA has temporarily suspended production at all of its automobile and components plants in North America and TMC has temporarily suspended production at selected plants in countries outside of North America.
These events have disrupted the supply chains of the vehicles we finance, have caused a decline in the sale of vehicles and our financing and insurance products, and could ultimately have a material adverse effect on the sale of vehicles and our financing and insurance products. These events have also caused an increase in unemployment claims, are expected to result in decreased consumer spending, and could cause economic deterioration. In addition, these events could result in lower used vehicle prices, increased delinquencies and dealer defaults, or cause other unpredictable and adverse events. The foregoing events, and the uncertainty relating thereto, have also adversely affected our credit rating.
If significant portions of our workforce are unable to work effectively as a result of the COVID-19 pandemic, including because of illness, quarantines, facility closures, ineffective remote work arrangements or technology failures or limitations, our operations would be adversely impacted. Certain of our third-party suppliers and business partners that we rely on to deliver our products and services and to operate our business have informed us that they will be unable to perform fully, and we expect to continue to receive similar notifications from other suppliers and business partners in the near future, which could adversely impact our ability to operate our business and increase our costs and expenses. These increased costs and expenses may not be fully recoverable or adequately covered by insurance. We are working with our stakeholders (including customers, dealers, team members, suppliers and business partners) to assess the impact of the COVID-19 pandemic and to take actions in an effort to mitigate adverse consequences. The duration of the COVID-19 pandemic is uncertain, and the foregoing impacts and other unforeseen impacts not referenced herein, as well as the ultimate impact of the COVID-19 pandemic, are difficult to predict and could have a material adverse effect on our business, financial condition, results of operations and cash flows."
To view the Form 8-K, please paste the URL below into the address bar of your browser.
http://www.rns-pdf.londonstockexchange.com/rns/0942I_1-2020-3-30.pdf
A copy of the Form 8-K will be submitted to the National Storage Mechanism and will be available shortly at: http://www.morningstar.co.uk/uk/NSM


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