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Toyota taps U.S. ESG bond market to fund electric-car push

Toyota sold socially conscious debt denominated in dollars for the first time in two years as the Japanese carmaker looks to boost its production of electric vehicles and compete with Tesla. "Most of the capital spending from the sector is going towards funding the transition to hybrid and electric vehicles." The analyst expects Toyota's operating margins to likely rise just as its peers may face increasing pressure from the launch of new EVs, additional competition from Chinese manufacturers and pricing tactics from Tesla.

The automaker is among three issuers selling new debt in the U.S. investment-grade primary market Thursday.

Syndicate desks are anticipating a very slow week in the primary market with $5 billion to $10 billion in new debt expected to price. Proceeds from the debt, which the automaker is calling "Woven planet bonds," will help fund projects that range from the development and manufacturing of battery electric vehicles, or BEVs, to green projects like solar and wind, according to an SEC filing.

Toyota's Chief Executive Officer Koji Sato in early April unveiled the beginnings of a long-awaited plan to electrify the automaker's vehicle lineup, promising that by 2026 Toyota will sell 1.5 million battery electric vehicles a year and roll out 10 new EV models. Toyota is still far from producing electric vehicles at the same scale and pace as Tesla and rivals in China.

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