OREANDA-NEWS. Fitch Ratings has assigned Russia-based AO Toyota Bank's (TBR) RUB3bn three-year (with a put option in two years) issue of fixed-rate rouble-denominated bonds (series 01) a final Long-term rating of 'A-'.

The proceeds from the issue will be used solely for TBR's purposes. Should TBR fail to make an interest or principal payment under the terms of the bonds, bondholders will benefit from the guarantee provided by TBR's sister company, Toyota Motor Finance (Netherlands) B.V. (TMFNL, A/Stable).

KEY RATING DRIVERS
The bonds' rating is driven by TMFNL's guarantee, under which it undertakes to make any payments due to bondholders in case of a delay in payment by TBR. TMFNL's guarantee represents an irrevocable undertaking and ranks equally with other senior unsecured obligations of TMFNL.

Payments to bondholders, including those made by TMFNL pursuant to the guarantee, will be made through the National Settlement Depository (NSD), which exposes bondholders to a quite remote/extreme form of country risk, specifically the impossibility of the settlement being made in Russia through NSD. Currently there is no contingency plan to make the settlement through an alternative non-Russian depository should it become impossible to do this through NSD. To capture this extreme form of country risk, the rating of the bonds is constrained at three notches above the Russian sovereign Long-term Issuer Default Ratings (BBB-/Negative).

RATING SENSITIVITIES
A downgrade of Russia's sovereign ratings would likely result in the downgrade of the bonds' rating. Although unlikely in the near term given the Negative Outlooks on Russia's ratings, an upgrade of Russia's sovereign ratings could lead to an upgrade of TBR's bonds.

A downgrade of TMFNL, although not currently envisaged due to the Stable Outlook on the company's rating, of more than two notches, would lead to a downgrade of the bonds' rating to the same level.