Toyota Motor Corp. has upsized an offering of “green” auto loan-backed securities, to $1.75 billion from $1.25 billion originally, according to a regulatory filing.
The deal, Toyota Auto Receivables 2014-A Owner Trust, is backed by a conventional mix of auto loans. However, proceeds from the deal will be ringfenced for "installment sale contracts and beneficial interests in lease contracts financing new Toyota and Lexus gas-electric hybrid or alternative fuel powertrain vehicles," the filing states.
Citigroup, Bank of America Merrill Lynch and Morgan Stanley are joint bookrunners.
Hybrid vehicles still account for a relatively small portion of U.S. sales of Toyota, Scion and Lexus brands; just 16,000 were sold in February, according to information posted on the automaker's website. By comparison, total sales for the month were 159,284. (That was a decline of 4.3% on the year; Toyota reported that it was largely attributable to a reduction in fleet sales.)
So while there may not be a lot of "green" car loans and leases to securitize, Toyota appears to be hoping that it can attract green investors by committing to use proceeds to finance future purchases of hybrid vehicles.
Proceeds from the offering will be placed into one or more segregated accounts and use of proceeds will be subject to audits by an independent accounting firm, according to the prospectus. Toyota can withdraw from the accounts solely to finance the purchase of the following models: Avalon Hybrid, Camry Hybrid, Prius, Prius c, Prius Plug-in, Prius v and RAV4 EV; Lexus CT 200h and Lexus ES 300h.
The A-1 tranche maturing in March 2016 was increased to $501 million from $385 million, the A-2 tranche maturing in August 2016 was increased to $560 million from $400 million, the A-3 tranche maturing in December 2017 was increased to $480 million from $343 million, while the A-4 tranche maturing in June 2019 was cut to $165.25 million from $177.5 million. Also, the B tranche maturing in April 2020 was increased to $43.75 million from $31.25 million.
Credit enhancement for the notes consists of a reserve account, overcollateralization, a yield supplement overcollateralization amount, excess interest on the receivables and, in the case of the Class A Notes, subordination of the Class B Notes.