NAGOYA -- Toyota Motor will float $2 billion worth of dollar-denominated bonds in late July to help fund investment in overseas production and in such growth fields as self-driving technology.
The automaker is expected to offer $750 million each in three- and five-year bonds, as well as $500 million in 10 year-bonds. It will mark the first time Toyota issues bonds in a currency other than the yen since 1997.
Toyota completed a shelf offering with the U.S. Securities and Exchange Commission and will sell the bonds to investors worldwide through lead underwriters JP Morgan, Bank of America Merrill Lynch and Citigroup.
The funds will not only be used as working capital, but also for growth. Capital investment and research expenses for the fiscal year ending March are set to reach a record 2.45 trillion yen ($21.9 trillion), as competition in the industry shifts toward such innovations as autonomous driving, electric vehicles and ride-sharing, with the chief rivals being information-technology companies like Google and Apple.
The automaker is also expanding investment in overseas factories as it introduces more models that are designed and built according to an approach dubbed Toyota New Global Architecture. Toyota decided to resume bond issues in foreign currencies to meet this international demand for funds.
The float will also help diversify its fundraising methods. Although roughly 75% of its cars are sold abroad, the company has continued to only offer bonds in Japan. Toyota hopes to stabilize its financing by appealing to foreign investors like U.S. and European pension funds that are hungry for bonds backed by relatively good credit.
Japanese companies in general are issuing more bonds in currencies other than the yen, with a record 51.3% of their bond floats in the first half of this year denominated in foreign currencies. The market is even widening to China, with Mizuho Bank and MUFG Bank both recently offering "panda" bonds in yuan for the mainland.