* Toyota Financial seeks state help to lower funding costs
* Paves way for other Japanese firms to follow
* Toyota says may seek public support from other countries
* Shares end down 0.3 pct in slightly weaker market
(Adds CDS background, Toyota funding cost)
By Mayumi Negishi and Nobuhiro Kubo
TOKYO, March 3 Toyota Motor Corp (7203.T) has
applied for a loan backed by the Japanese government to help its
finance arm cut funding costs as the global crisis tightens
access to credit, a company official said on Tuesday.
Toyota, facing an operating loss of $4.6 billion this
business year, was seeking a loan of about $2.1 billion through
its wholly owned car-loan financing firm Toyota Financial
Services, public broadcaster NHK TV reported earlier.
Chronic fear of default is making low-cost funds harder to
come by, especially in the United States, even for cash-rich
companies such as Toyota.
"Toyota is not in danger. It's out to get the lowest price
for funding that the strength of its credit can get," said
Yasuaki Iwamoto, an analyst at Okasan Securities. "On the balance
sheet, it doesn't matter if the funds are private or public."
The cost of debt at the world's top automaker has gone up in
the past year, with a five-year bond sold by Toyota Finance in
December offering a subscriber's yield of 1.248 percent, up from
1.106 percent for debt in the same maturity sold in April 2008.
Mio Sugito, an official at Toyota's business management
group, said Toyota Financial Services is in talks with the
state-backed Japan Bank for International Cooperation for a loan
to help cover rising credit costs.
No decision has been made on the size of the loan, the timing
or the currency denomination, she said.
Toyota is also considering applying for public support from
other countries, she said, without elaborating.
JAPAN TO HELP COMPANIES
With credit markets worldwide in turmoil, Toyota's move may
make it easier for other Japanese companies to follow suit and
turn to state-backed loans prior to the closing of books for the
business year at the end of March.
Japan said on Tuesday it plans to use some of its foreign
exchange reserves to help Japanese companies exposed to the
global credit squeeze. [ID:nT216136]
The heat is on financial services firms catering to
automakers, which need to secure cheap financing to supply zero-
and low-interest loans to woo reluctant consumers.
Toyota Financial Services, whose assets totalled 14.3
trillion yen ($147 billion) as of the end of September, providing
car leases around the world and home loans and asset management
services in Japan.
Credit default swaps on automakers in Asia and Europe have
jumped in price as investors worry about liquidity and short-term
debt maturities at carmakers' financial services operations.
The Moody's CDS implied rating for Toyota was six notches
lower than its actual rating of Aa1. [ID:nL2520864]
But Toyota is in a much better position than its competitors,
which have a higher percentage of loans in arrears, said Okasan's
Five-year credit default swaps on Toyota were at 215 basis
points on Monday, meaning it cost $215,000 a year to protect $10
million of debt, way below the 674 basis points of its rival
Nissan Motor Co (7201.T), according to Markit Intraday.
Carmakers worldwide are reeling from a collapse in consumer
demand since last year that has forced them to cut production and
U.S. auto sales for February, due later on Tuesday, are
expected to show sales down about 40 percent and hovering near 27
year lows. [ID:nN02403884]
Finance company GMAC, the main lender to struggling automaker
General Motors Corp (GM.N), has been hit by losses in its auto
and mortgage units, but won a $6 billion government bailout in
December and a ticket to tap lower-cost funding.
Among other Japanese firms, heavily indebted companies such
as chipmaker Elpida Memory Inc 6665.T have said they are
considering seeking emergency government funds under a separate
scheme aimed at bolstering nonfinancial companies.
Shares of Toyota fell 0.3 percent to 3,060 yen, compared with
a 0.7 percent fall in the Nikkei average .N225.
(Additional reporting by Rika Otsuka in Tokyo and Eric Burroughs
in Shanghai; Editing by Michael Watson)