Toyota Financial Services (TFS) Expands Auto Industry's Only Asset-Backed Green Bond Program

Bond Proceeds to Fund New Consumer Loans and Leases for Toyota’s Leading Portfolio of Green Vehicles

TORRANCE, CA -- June 18, 2015: Demonstrating an ongoing commitment to supporting the sale of green vehicles, Toyota Financial Services (TFS) issued the auto industry’s second-ever Asset-Backed Green Bond in the amount of $1.25 billion. TFS revolutionized the Green Bond market by introducing the auto industry’s first-ever Asset-Backed Green Bond in 2014. Green Bonds are an important component of TFS’ broad-ranging funding program and serve to enhance Toyota’s already extensive green commitment.

Proceeds of the TFS Green Bond will be used to fund new retail finance contracts and lease contracts for Toyota and Lexus vehicles that meet specific criteria, including powertrain, fuel efficiency and emissions. There are currently eight vehicles in the Toyota and Lexus portfolio of green vehicles that qualify.

“Investors enthusiastically welcomed the continuation of the auto industry’s sole Green Bond program from Toyota Financial Services,” said Mike Groff, TFS CEO. “The Green Bond itself represents the innovation that TFS brings to the financial marketplace and reflects Toyota’s commitment to environmentally friendly transportation. Its proceeds will enable us to continue to provide Toyota and Lexus customers with attractive financing options for their vehicles.”

To develop the Green Bond, TFS worked closely with Citi, which has a long-standing relationship with TFS and shares its commitment to green innovation. Citi served as the structuring lead manager of the bond, and BofA Merrill Lynch and Credit Agricole acted as joint-lead managers.

The TFS Green Bond program is unique in the auto industry and enhances Toyota’s leadership reputation for green innovation. Toyota currently offers hybrid editions in nearly all of its vehicle categories. Since the launch of the first Prius in 1997, Toyota has sold over 2.4 million hybrid vehicles in North America.

“Citi is proud to support Toyota Financial Services and this innovative transaction,” said Tyler Dickson, Global Head of Capital Markets Origination at Citi. “With growing investor demand for environmentally friendly, energy efficient assets such as the TFS Green Bond, we see a significant opportunity for Toyota to continue its leadership in clean transportation investments.”

TFS will commit to use the proceeds of the Green Bond toward the purchase of retail finance contracts and lease contracts for Toyota and Lexus vehicles that meet high green standards as established by three criteria:

Gas-electric hybrid or alternative fuel powertrain

Minimum EPA estimated MPG (or MPG equivalent for alternative fuel vehicles) of 35 city / 35 highway

California Low-Emission Vehicle II (LEV II) certification of super ultra-low emission vehicles (SULEVs) or higher, which would include partial zero emissions vehicles (PZEVs) and zero emissions vehicles (ZEVs)

Qualifying models from Toyota include: Prius, Prius c, Prius v, Prius Plug-in, Camry Hybrid, and Avalon Hybrid. From Lexus, qualifying vehicles are CT 200h and ES 300h.

For more information on TFS' Capital Markets programs, please visit Toyota Financial.