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RAM Ratings affirms AAA(s)/Stable rating of Toyota Capital’s guaranteed debt facilities
Published on 18 Nov 2025.
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
The credit rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security’s market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings. The credit rating also does not reflect the legality and enforceability of financial obligations.
RAM Ratings receives compensation for its rating services, normally paid by the issuers of such securities or the rated entity, and sometimes third parties participating in marketing the securities, insurers, guarantors, other obligors, underwriters, etc. The receipt of this compensation has no influence on RAM Ratings’ credit opinions or other analytical processes. In all instances, RAM Ratings is committed to preserving the objectivity, integrity and independence of its ratings. Rating fees are communicated to clients prior to the issuance of rating opinions. While RAM Ratings reserves the right to disseminate the ratings, it receives no payment for doing so, except for subscriptions to its publications.
Similarly, the disclaimers above also apply to RAM Ratings’ credit-related analyses and commentaries, where relevant.
Published by RAM Rating Services Berhad
© Copyright 2025 by RAM Rating Services Berhad
