[RAM] RAM Ratings affirms AAA(s)/Stable rating of Toyota Capital's guaranteed debt facilities

RAM Ratings has affirmed the AAA(s)/Stable rating of Toyota Capital Malaysia Sdn Bhd’s (Toyota Capital or the Company) RM2.5 billion Conventional and Islamic Medium-Term Notes (MTN) Programme (2016/2031) and RM2.5 billion Conventional and Islamic MTN Programme (2025/2040). 

The enhanced(s) ratings reflect the strength of the irrevocable and unconditional guarantees from Toyota Motor Finance (Netherlands) BV (Toyota Netherlands), a wholly owned subsidiary of Toyota Financial Services Corporation (TFS). These guarantees are further supported by a chain of credit support agreements extending up to Toyota Motor Corporation (TMC or the Group). TMC, a leading global automotive manufacturer, boasts a solid business profile, underpinned by diversified geographical operations and a conservative financial profile marked by low leverage and solid liquidity. 

On a stand-alone basis, Toyota Capital’s performance has remained within expectations. Despite economic headwinds, inflationary pressures and seasonal factors, the Company’s asset quality remained satisfactory as reflected by a gross impaired financing (GIF) ratio of 1.3% as at end-March 2025. Although GIF coverage declined to 88.4% as at end-March 2025 (end-March 2024: 108.2%), prudent risk management should keep asset quality pressures contained.  

The Company’s profitability and gearing remain weaker compared to peers. In FY Mar 2025, the Company’s adjusted pre-tax profit eased to RM92.4 mil (FY Mar 2024: RM96.2 mil), translating into a lower adjusted return on assets of 0.8% (FY Mar 2024 1.0%). The weaker profit performance was mainly driven by heftier operating costs and impairment charges as well as a narrower net interest margin. Toyota Capital’s adjusted net gearing ratio of 14.4 times as at end-March 2025 remains among the highest in RAM’s rated portfolio of hire purchase and leasing players. Nevertheless, the elevated leverage is mitigated by parental guarantees covering all outstanding bonds and sukuk.


Analytical contacts
Jeremy Noel Paul 
(603) 3385 2556
jeremynp@ram.com.my

Sophia Lee
(603) 3385 2619
sophia@ram.com.my

Media contact 
Sakinah Arifin
(603) 3385 2500
sakinah@ram.com.my