Tokyo – (IINA)– Toyota Motor Corp., the world’s second-biggest automaker, will issue up to $313 million worth of Islamic bonds in Malaysia to raise funds for its automobile leasing and loan operations, a leading Japanese financial paper reported today. A Malaysian unit of Toyota Financial Services Corp. will start offering the bonds, known as Sukuk, as early as this month, the Nikkei Shimbun said, adding that Toyota faces a need to diversify its fundraising methods in Malaysia to tap the growing number of vehicle owners there. The program, to be effective for seven years, will include commercial paper with maturities of up to 12 months and medium-term notes that mature in up to seven years, the daily said.
Toyota has determined that it can secure funds by adopting a fundraising method that suits the local religious culture, which prohibits the paying of interest. Bank of Tokyo-Mitsubishi UFJ and leading Malaysian investment bank CIMB Group will be the principal managers, and the bonds to be issued have obtained the highest grade from a Malaysian rating agency, according to the report. Toyota Financial Services’ Malaysian unit began offering Islamic auto loans in 2006 and car leasing services last summer.
Its loan balances reached about $78 million as of March 31. The firm plans to boost this figure 60 percent to million $125 million in one year. The Malaysian securities market is increasingly going Islamic, reflecting growing efforts to attract petrodollars at a time when crude oil is being traded at record prices.