Toyota Joins the Bailout Bandwagon

Discussion in 'OT Driven' started by TriShield, Mar 3, 2009.

  1. TriShield

    TriShield Super Moderator® Super Moderator

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    Toyota, Facing First Loss in 59 Years, Seeks Loans From Japan

    By Tetsuya Komatsu and Naoko Fujimura

    March 3 (Bloomberg) -- Toyota Motor Corp., forecasting its first loss in 59 years, is seeking loans from the Japanese government as private investors demand up to 50 percent more in interest for the company’s debt.

    The company’s financial unit may ask for 200 billion yen ($2 billion) in loans, public broadcaster NHK reported today, without citing anyone. Toyota Financial Services Corp. spokesman Toshiaki Kawai said the unit is in talks with state-owned Japan Bank for International Cooperation, without confirming the amount.

    The carmaker expects a net loss of 350 billion yen after vehicle sales in the U.S., traditionally Toyota’s most profitable market, plunged 31 percent last quarter. Incoming President Akio Toyoda is adding to the company’s reserves as the global recession also forces General Motors Corp. and Chrysler LLC to get bailouts from the U.S. government.

    “Toyota should take advantage of anything it can to get through this crisis,” said Hitoshi Yamamoto, chief executive officer of Tokyo-based Fortis Asset Management Japan Co., which manages $5.5 billion in Japanese equities. “Money is not flowing in the capital markets.”

    Automakers usually raise funds through bonds and loans for their financial companies to offer loans for their customers. The government aid would mostly be used to help offer loans to customers in North America, Toyota Financial’s Kawai said.

    Toyota sold 80 billion yen in 10-year bonds priced to yield 2.012 percent last month. That compares with 150 billion yen of 10-year bonds sold in August 2002, priced to yield 1.337 percent.

    Laying Up Cash

    “Toyota is trying to lay up as much cash as it can to protect itself in a worst case scenario,” said Yasuhiro Matsumoto, a senior analyst at Shinsei Securities Co. in Tokyo. “The government loans, combined with the bond sale, show how much Toyota fears the global financial crisis.”

    Japan will use some of its foreign-exchange reserves to lend to the state-owned corporation that gives financing to Japanese companies operating abroad, Japanese Finance Minister Kaoru Yosano said today.

    Toyota follows other carmakers seeking government help as sales plunge worldwide. GM has received $13.4 billion in U.S. aid and is seeking more to keep its operations in its home market running through this month. France granted PSA Peugeot Citroen and Renault SA a total of 6 billion euros in five-year loans last month. In the U.K., carmakers are seeking support for their finance units from the Bank of England. Mitsubishi Motors Corp. has gotten subsidies from Japan’s Ministry of Health, Labor and Welfare to help pay wages, as it cuts domestic production.

    Slashing Production

    Toyota, the maker of the Corolla compact, may slash production 12 percent next fiscal year, it said yesterday. Toyota’s sales in Japan plunged 32 percent last month. In the U.S., sales also dropped 32 percent in January. Worldwide vehicles sales may fall 14 percent to 55 million units in 2009, according to Nissan Chief Executive Carlos Ghosn.

    In response, automakers are shutting factories and cutting jobs. Toyota plans to halve the number of contract workers in Japan to 3,000 by March 31. GM last month said it is cutting another 47,000 jobs globally, as it reported a $30.9 billion annual loss. Volkswagen AG, Europe’s largest carmaker, on Feb. 28 said it will cut all 16,500 temporary jobs globally and shuttered five factories in Germany last week.

    The Toyota City, Japan-based company has 2.34 trillion yen in loans and bonds maturing this year, according to data compiled by Bloomberg. The company had 2.3 trillion yen in cash reserves as of Dec. 31.

    The extra yield over government debt of similar maturity that investors demand to own Toyota’s 1.22 percent bond due 2011 has more than doubled to 56.75 basis points as of yesterday from September according to data compiled by Bloomberg.

    Toyota fell 0.3 percent to 3,060 yen, at the close of trading in Tokyo. The shares have risen 5.3 percent this year compared with a 19 percent drop in the benchmark Nikkei 225 Stock Average.

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  2. TriShield

    TriShield Super Moderator® Super Moderator

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    It’s True: Toyota Asks Japanese Government-Backed Bank For $2b

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    By Edward Niedermeyer
    March 3, 2009

    Toyota Financial Services has requested a $2B loan from the Japan Bank for International Cooperation, a government-backed lending institution. TFS says it needs the money to cover the higher cost of borrowing in the US. According to Automotive News [sub], “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.” Toyota’s “implied” credit rating based on credit-default swaps is considerably lower than its current Moody’s rating, as fears grow about liquidity problems across the automotive industry. The money will come from a $5B fund established by the Japanese government to provide liquidity for firms which operate abroad. These funds are said to come from Japan’s $1T+ in foreign cash reserves, the world’s second-largest foreign currency reserves after China. Nissan and Mitsubishi have also said they will apply for loans from this fund.
     
  3. Tom93R1

    Tom93R1 Member

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    How can an auto maker be profitable for 59 straight years and need a bailout on the 60th year when it has just forecast it's first loss?
     
  4. TriShield

    TriShield Super Moderator® Super Moderator

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    Honda, Mazda May Apply for Japanese Government Loans

    By Makiko Kitamura and Tetsuya Komatsu

    March 4 (Bloomberg) -- Honda Motor Co., suffering from a 38 percent plunge in U.S. auto sales in February, may ask to borrow money from Japan’s government to lend to U.S. car buyers.

    The amount of the loans and timing of the request to the state-owned Japan Bank for International Cooperation haven’t yet been determined, spokeswoman Akemi Ando said by phone today. Mazda Motor Corp. is also considering a request for government loans, spokesman Toyota Tanaka said today.

    Honda and Mazda would follow Toyota Motor Corp., Japan’s biggest carmaker, in seeking loans from the government as the global recession hammers auto demand. U.S. auto sales in February slid to the lowest rate since December 1981, led by a 53 percent plunge for General Motors Corp.

    “Things look pretty grim at present,” said Edwin Merner, president of Atlantis Investment Research Corp. in Tokyo, which manages $3.1 billion. “By the end of the year, the year-on-year figures should start improving unless the world economy gets much worse.”

    Among Honda’s models, only its Fit small car and Acura TSX sport sedan, posted U.S. sales gains last month. The company may request at least 10 billion yen ($102 million) from the government, the Nikkei newspaper said today, without citing sources.

    Mazda

    Mazda, the Japanese carmaker partially owned by Ford Motor Co., increasingly needs the funds, mainly in the U.S. and Europe, Tanaka said in a phone interview. No details have been decided regarding a request for government funding, he said.

    The carmaker’s U.S. sales slid 30 percent in February to 16,401 vehicles.

    Japan will use some of its foreign-exchange reserves to lend to the state-owned bank that gives financing to Japanese companies operating abroad, Japanese Finance Minister Kaoru Yosano said yesterday. The ministry may lend about $5 billion to the bank this month, he said.

    Honda has 986 billion yen in bonds coming due this year, according to data compiled by Bloomberg. Toyota’s financial unit may ask for 200 billion yen in loans, public broadcaster NHK reported yesterday, without citing anyone.

    Honda fell 3.5 percent to close at 2,205 yen on the Tokyo Stock Exchange. Mazda rose 5.1 percent to 124 yen.

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  5. TriShield

    TriShield Super Moderator® Super Moderator

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    It shows just how fast and how deeply the new vehicle market has collapsed, especially here in the US.
     
  6. TriShield

    TriShield Super Moderator® Super Moderator

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    Sumimasen, can you spare some billions? Japanese automakers are keeping up with the Joneses, or make that Tanakas: Japanese automakers are turning to government lending to secure operational funds, the Nikkei [sub] writes. Honda is considering borrowing from the Japan Bank for International Cooperation, Toyota is negotiating a five-year loan of about 200 billion yen, also from JBIC. Mitsubishi Motors has applied for a low-interest loan from the Development Bank of Japan. Honda intends to seek tens of billions of yen in dollar-denominated loans from JBIC for its US financing arm, American Honda Finance Corp. The carmaker aims to build up more cash for auto loans and leases. Toyota Financial Services Corp. has also approached JBIC to procure funds for its US financing unit, Toyota Motor Credit Corp. Nissan is double dipping—at the very least. They applied for a roughly 50 billion yen loan with the DBJ as well as a low-interest loan from the US government. It is also considering tapping JBIC loans.

    Nissan sets targets lower: Nissan has set its global auto production target for April-September at roughly 1.29 million units, down 27 percent from a year earlier and the lowest level in eight years, the Nikkei [sub] learned. Nissan did not reveal plans for the second half of fiscal 2009. And then the moment of Zen: “Anticipating a tough year, Nissan has urged autoparts makers to cut funds outflows and ensure that they have sufficient funds.”
     

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