VZCZCXRO1825
PP RUEHFK RUEHKSO RUEHNAG RUEHNH
DE RUEHKO #0515/01 0651012
ZNR UUUUU ZZH
P 061012Z MAR 09
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC PRIORITY 1300
INFO RUEHBJ/AMEMBASSY BEIJING 8118
RUEHRL/AMEMBASSY BERLIN 1609
RUEHBY/AMEMBASSY CANBERRA 3065
RUEHLO/AMEMBASSY LONDON 2362
RUEHFR/AMEMBASSY PARIS 6448
RUEHUL/AMEMBASSY SEOUL 4140
RUEHGP/AMEMBASSY SINGAPORE 7352
RUEHNAG/AMCONSUL NAGOYA 0611
RUEHNH/AMCONSUL NAHA 5166
RUEHOK/AMCONSUL OSAKA KOBE 6610
RUEHFK/AMCONSUL FUKUOKA 2819
RUEHKSO/AMCONSUL SAPPORO 3369
RUEHHK/AMCONSUL HONG KONG 6716
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHBS/USEU BRUSSELS
RULSDMK/DEPT OF TRANSPORTATION WASHINGTON DC
RUEATRS/TREASURY DEPT WASHDC

UNCLAS SECTION 01 OF 03 TOKYO 000515 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/J, EEB/TRA, EEB/TTP/MTAA FOR B. NAFZIGER 
STATE PASS USTR FOR AUSTR CUTLER, M BEEMAN, R MALMROSE 
DEPARTMENT OF COMMERCE FOR K ROTH AND D BARZDUKAS 
 
E.O. 12958: N/A 
TAGS: EIND ETRD SENV PREL WTO EFIN ENRG JA
SUBJECT: TOYOTA IN TALKS TO ACCESS JBIC LOAN FACILITY 
 
REF: A. TOKYO 345 
     ¶B. TOKYO 228 
 
Sensitive But Unclassified.  Contains Proprietary Information. 
 
¶1.  (SBU) Summary:  Toyota Financial Services, the Japanese 
automaker's financing arm, reportedly has requested $2 
billion from the Japan Bank for International Cooperation 
(JBIC) to support its financing operations in the U.S.  JBIC 
officials told emboffs March 6 its recently launched lending 
facility for Japanese companies' operations in developed 
countries, one of several GOJ responses to global financial 
turmoil, is primarily intended to complement private lending 
and assist Japanese firms having trouble raising dollars due 
to the seizing up of capital markets.  Separately, a Toyota 
official suggested the firm is seeking JBIC support in an 
attempt to secure funds at rates comparable to those received 
by U.S. auto firms through USG assistance -- rates that are 
not otherwise available through private financial 
institutions.  End summary. 
 
JBIC Loan Facility 
------------------ 
 
¶2.  (U) Following an administrative reorganization effective 
October 2008, JBIC -- Japan's equivalent of the Export-Import 
Bank and Overseas Private Investment Corporation -- 
officially ceased lending for most projects in developed 
countries.  The shift in JBIC's scope of operations came as 
part of a longer term move by the GOJ to decrease the 
availability of programs in industrialized countries where it 
was assured firms could obtain financing from private 
lenders.  However, following instructions from then-Finance 
Minister Shoichi Nakagawa to examine ways to facilitate JBIC 
support for Japanese companies in need of dollar financing 
due to the global economic crisis, the GOJ issued a Cabinet 
Order December 26 that enabled JBIC to provide loans and 
guarantees under the Japan Finance Corporation Law.  This 
provision allows JBIC to fund developed country loans in the 
event of financial turmoil.  The JBIC received inquiries from 
several companies following the December order (ref A), 
according to media reports. 
 
¶3.  (U) Under terms announced by the Finance Ministry January 
27, JBIC is authorized to fund business operations of 
Japanese firms or local subsidiaries in 22 industrialized 
countries, including the U.S.  The facility, which runs 
through March 2010, requires co-financing with private banks, 
and JBIC can lend up to 60 percent of the total co-financed 
amount for large firms or 70 percent for small and medium 
enterprises.  The loans are to have a maturity of one to five 
years (short-term lending of less than one year is not 
eligible under the Japan Finance Corporation Law) at an 
interest rate no lower than that offered by the co-financing 
institution. 
 
¶4.  (SBU) In early February, JBIC identified five types of 
situations in which it would consider financing, including: 
(1) a need to obtain long-term financing to cope with 
increased inventories or deteriorated earnings due to a 
decline in sales; (2) to finance replacement capital 
equipment; (3) funding for capital investment or acquisitions 
for contracts signed by January 27, 2009; (4) to finance the 
acquisition of the portion of equity stakes in a foreign 
joint venture where the foreign investment partner has 
withdrawn; and (5) to refinance long-term debt (e.g., as 
corporate bonds reach maturity).  The JBIC is currently 
working with the Ministry of Finance to further clarify 
requirements to obtain eligible funding. 
 
 
TOKYO 00000515  002 OF 003 
 
 
¶5.  (SBU) The GOJ plans to lend JBIC around 5 billion dollars 
from its Foreign Exchange Fund Special Account by the end of 
March, State Minister for Economic and Fiscal Policy and 
Finance Minister Kaoru Yosano reportedly told a press 
conference March 4.  The JBIC issues roughly 80-90 percent of 
its loans in dollars.  Officials at JBIC with whom we spoke 
said the loan facility is intended to support as many as 
50-60 companies rather than just a few large firms. 
 
¶6.  (SBU)  The purpose of the loan facility, JBIC officials 
told emboffs March 6, is a temporary response to liquidity 
problems facing firms due to the freezing of commercial paper 
and other financial markets, rather than an inability of 
firms to raise capital due to poor creditworthiness.  He 
asserted the loan facility is designed to complement, not 
replace, private lending.  The JBIC expects companies to have 
negotiated terms with a private lender before approaching 
JBIC jointly for additional financing.  Since the underlying 
issue is liquidity, not solvency, JBIC does not expect to 
guarantee the private sector loans. 
 
Toyota Seeks JBIC Loan 
---------------------- 
 
¶7.  (SBU) According to media sources, Toyota Corporation 
seeks 200 billion yen (approximately $2 billion) from the 
JBIC program.  Although he would not confirm the amount of 
the loan, a 200 billion yen loan would cover only a small 
portion of Toyota's operational costs in the U.S., a senior 
Toyota corporate auditor told emboff March 6.  Since the U.S. 
is Toyota's principal market, the loan, if secured, would be 
used for U.S. operations, he explained. 
 
¶8.  (SBU) Approximately 70 percent of Toyota customers in the 
U.S. use loans -- either from financial institutions or 
Toyota's U.S. subsidiary, Toyota Motor Credit Corporation 
(TMCC) -- to purchase new vehicles, said this Toyota 
official.  With virtually all private commercial lending 
having dried up in the U.S., TMCC has been forced is pick up 
the slack.  Even for Toyota, the world's largest automaker, 
it has become difficult to secure the necessary volume of 
loans.  Toyota's three trillion yen (approximately $300 
billion) in cash is insufficient to cover its operations, the 
official claimed.  Higher borrowing costs, he continued, have 
further exacerbated Toyota's difficulty obtaining affordable 
loans from U.S. banks.  As a result, Toyota is taking 
measures to secure necessary funds, including from 
government-owned banks, he explained. 
 
¶9.  (SBU) In contrast, the U.S. Big Three can secure 
operating funds at a lower interest rate by receiving 
assistance from the USG, our Toyota contact contended. 
Although Toyota is still healthy, its costs to fund U.S. 
operations are growing.  Toyota approached USG financial 
institutions, including the Federal Deposit Insurance 
Corporation (FDIC), to request help in obtaining loans with 
an interest rate comparable that received by U.S. automakers, 
but was refused.  The Toyota official said Toyota understands 
the issue is very complicated and that the company will not 
receive the same kind of support from the USG as the Big 
Three.  However, he continued, Toyota would be grateful if it 
could receive USG support, based on the volume of vehicles it 
manufactures in the U.S. (1.7 million units in its peak year 
of 2007) and on-going efforts to avoid layoffs at its U.S. 
facilities.  (Note:  In 2007, Toyota directly employed 36,866 
people in the U.S.  End note.) 
 
¶10.  (SBU)  Mission will continue to keep a close watch on 
this and other assistance efforts to assess their overall 
effect and impact. 
 
TOKYO 00000515  003 OF 003 
 
 
 
¶11.  (U) Consulate Nagoya contributed to this cable. 
ZUMWALT