Toyota is continuing its commitment to financing projects that support climate and other environmentally sustainability initiatives with the Toyota Auto Receivables 2021-B Owner Trust.
Also known as TAOT 2021-B, the $1.2 billion transaction is Toyota Motor Credit Corporation’s fourth issuance through its ABS Green Bond program. Toyota says it launched the auto industry’s first asset-backed Green Bond in 2014.
A pool of fixed-rate retail installment sales contracts on new and used cars, crossover utility vehicles, light-duty trucks and sport utility vehicles secures TAOT 2021-B. Toyota originated the car financings in the origination pool, according to an initial assessment from FitchRatings.
The transaction references two potential pools to be securitized, one for $1.3 billion, which will underpin the $1.2 billion notes, and a larger $1.7 billion, which will support $1.6 billion in certificates.
Among the key credit considerations is that the borrowers appear to have strong credit, beginning with a weighted average FICO score of 767. The pool also has a lower level of extended term loans at 50.6 percent.
Overall, coronavirus concerns might be lessening, but are worth monitoring. In a base-case scenario, Fitch assumes that the global COVID-19 induced recession of 1H 2020 and economic activity bounce in 2H 2020 could give way to a slower recovery trajectory in 2021. Looking ahead, Fitch says that it believes TMCC’s business continuity plan as adequate to minimize disruptions in collections.
Citigroup Global Markets is the lead underwriter on the deal, which has four classes of Fitch-rated notes.
The $244 million class A-1 notes are rated ‘F1+sf’; both class A-2 and class A-3 notes, both with $410 million in notes, are rated ‘AAA’; the $106 million A-4 notes are also rated ‘AAA.’
TAOT 2021-B is also fairly geographically diverse. California accounts for 25.7 percent of financings in the pool, while Texas accounts for 12.9 percent. Other states with high exposures accounted for less than five percent of the overall deal.
