It was difficult, in the early days, to predict the ramifications of COVID-19. But in the end the Australian auto industry fared very well. New vehicle sales declined slightly in 2020 but bounced back in 2021 with
more than one million unit sales. This was a very pleasing result, especially given the frequent lockdowns.

The used vehicle market also performed well. This provided the opportunity to assist some our fleet customers. We were able to de-fleet where required and offer those vehicles into the market.

Another interesting aspect has been navigating financial markets. The funding volume we have needed to achieve has been in line with prior years, but accessing capital markets has been more challenging. We have had to really focus on understanding which markets will be conducive to a successful deal at
any particular point in time.

The euro market has always been a good source of liquidity for the Toyota name. In January, we launched and priced a successful deal. Spreads have trended wider ever since, so we were very fortunate with our timing.

We also launched a domestic bond in March – which was a little challenging by way of investor participation given the risk-off tone in the market at the time. Having said this, we always enjoy printing in our local market and Toyota will continue to be a frequent issuer here in Australia.

In June, we issued a sterling bond, which was a great transaction. The sterling market can be a little fickle on occasion. Pricing was the tightest of comparative markets at the time and £350 million (US$400 million) was a great benchmark size.

Looking forward, funding remains business as usual. We continue our strategy of being a frequent issuer in the domestic market and, subject to favourable market conditions, TFA aims to come to market a couple of times per year.

It was great to see the major banks open the domestic market again over August-September. This demonstrates that investors are starting to increase their activity and participation in transactions.

We have undertaken a number of investor meetings over the past couple of months and there is definitely more appetite from investors to engage with issuers. I get the sense that, from a capital market perspective, we are moving into the next phase – things are starting to stabilise to some extent, although geopolitical tensions continue to create uncertainty and volatility.

The euro market remains high on our agenda for frequent issuance and, again, we monitor regularly with the view to launching a transaction when we observe favourable market sentiment and conducive new bond issuance conditions. Regardless of the geopolitical landscape, the euro market has remained pretty resilient.

We also continue to look at the public securitisation space in Australia. We are working on the structural and documentation requirements and aim to launch a deal in the near future.

An initiative implemented in the past few months has been our direct issuance domestic commercial paper strategy. This enables TFA to issue directly to investors rather than through an intermediary. We are really excited about the benefits this provides to TFA and our investors, particularly around engagement and transaction flexibility.

We continue to use the bank loan market as a source of diversified funding. We have not switched out of capital markets in favour of the loan market as we still find capital markets to be more competitive from a pricing perspective as well as providing the deeper liquidity we need to fulfil our funding requirements. To be fair, it did feel like a buyer’s strike earlier in the year so it is understandable that some corporate issuers might have turned to loans to achieve their funding needs.