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Archives: CreditSights Issuer List
Kingdom of Saudi Arabia
- Bond: KSA 5.125 28
- Indicative Yield-to-Maturity (YTM): 4.498%
- Credit Rating : Aa3 / - / A+
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Country Overview
AS OF 27 Feb 2025- The Kingdom of Saudi Arabia’s economy is heavily reliant on its petroleum sector. Oil accounts for almost 40% of Saudi’s GDP and 75% of its fiscal revenue.
- Saudi Arabia has the second largest proven petroleum reserves and fourth largest measured natural gas reserves. It is currently the largest exporter of petroleum in the world.
- As of 2023, Saudi Arabia’s main exports were China (12.0% of total exports), Japan (6.4%), India (6.3%), and South Korea (6.1%)
Macro Fundamentals
AS OF 27 Feb 2025- There is an expectation that deficits may remain within the 4% -7% assuming Brent averages at less than USD 75 per barrel in 2025. Despite this, we still expect its credit to remain stable given that its deficits are still in line with developed economies.
- The debt-to-GDP ratio of about 28.3% remains low compared to its developed economy peers. Combined with sizable reserve buffers, this mitigates any potential headwinds from the country’s oil sector.
- Saudi Arabia’s inflation is within modest levels given that the riyal is pegged at 3.75 riyals per US dollar since 1986. Its monetary authority also mirrors the US Fed’s decisions when it comes to local rates.
Risk & Catalysts
AS OF 27 Feb 2025- Saudi Arabia’s government revenues are closely linked to fluctuations in oil prices. Lower oil prices could result in slower economic growth and higher deficits.
- Saudi Arabia has huge forex reserves to maintain its peg to the US dollar in the event of external shocks.
- The government aims to diversify the economy with multibillion investments in the technology and tourism sectors. However, the high costs could pose a risk to the government budget balance.
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Search topics about wealth insights and investments.Meta Platforms
- Sector: TechnologyTechnology Media and Telecommunications
- Sub Sector: Technology
- Country: US
- Bond: META 4.95 33
- Indicative Yield-to-Maturity (YTM): 4.95%
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Fundamental View
AS OF 25 Feb 2025We are encouraged by Meta’s strong advertising growth relative to peers in 2023 and 2024. Meta has extremely strong credit metrics of 0.3x gross leverage and $49 bn net cash. We continue to expect Meta to be a regular/annual issuer to fund its shareholder returns and massive investments in AI and the metaverse.
Longer term, we expect Meta to adhere to its previously communicated financial policy of maintaining a positive or neutral cash balance. Meta does have legal and regulatory risks notably an FTC suit that seeks to unwind its prior acquisitions of Instagram and WhatsApp. However, not all event risk is negative as Meta would be the greatest beneficiary from a potential TikTok ban.
Business Description
AS OF 25 Feb 2025- Meta Platforms is the largest social networking company in the world. Meta generates substantially all of its revenue from advertising which includes Facebook, Instagram, Messenger, and third-party affiliated websites or mobile applications.
- In 4Q24, Family of Apps was 98% of revenue (96.7% from advertising and 1.1% from other) and Reality Labs was 2% of revenue. Reality Labs generated $17.7 bn in operating losses during LTM 4Q24 as the company is investing heavily in the metaverse.
- There are 3.35 bn Family Daily Active People (DAP) as of 4Q24, and the Family Average Revenue per Person (ARPP) was $14.25 quarterly in 4Q24.
- Meta is headquartered in Menlo Park, California. Employee headcount was >74k at 4Q24.
Risk & Catalysts
AS OF 25 Feb 2025In December 2020, the FTC filed a lawsuit against Meta targeting its acquisitions of Instagram and Whatsapp. If Meta is forced to unwind prior acquisitions, this would be a credit negative given reduced scale and diversification.
Meta’s business model relies almost entirely on user-generated content. As such, there are risks related to customer privacy (e.g., Cambridge Analytica data scandal in 2018) and regulatory changes (e.g., Section 230 protections).
In April 2024, the US signed into law a bill requiring a sale or ban of TikTok, although Trump signed an executive order instructing the Attorney General to not enforce the TikTok ban for 75 days (to 4/5/2025). If a ban is implemented, this would positively impact Meta and others with competing short-form video products.
In October 2022, activist Altimeter Capital wrote a letter to Zuck and Board although it was on the friendly-side of activism and some suggestions have already been implemented.
Key Metric
AS OF 25 Feb 2025| $ mn | 2020 | 2021 | 2022 | 2023 | LTM 4Q24 |
|---|---|---|---|---|---|
| Revenue YoY % | 21.6% | 37.2% | (1.1%) | 15.7% | 21.9% |
| EBITDA | 46,069 | 63,882 | 49,622 | 71,955 | 101,568 |
| EBITDA Margin | 53.6% | 54.2% | 42.6% | 53.3% | 61.7% |
| CapEx % of Sales | 18.3% | 16.3% | 27.5% | 20.8% | 23.8% |
| Sh. Ret. % of CFO-CapEx | 27% | 116% | 152% | 46% | 68% |
| Net Debt | (61,954) | (47,998) | (30,815) | (47,018) | (48,989) |
| Gross Leverage | 0.0x | 0.0x | 0.2x | 0.3x | 0.3x |
| EV / EBITDA | 15.8x | 14.0x | 5.8x | 12.3x | 14.5x |
CreditSight View Comment
AS OF 31 Jul 2025While Meta is executing strongly from a product perspective, we are concerned by its surging AI investments and regulatory risks. Meta acquired a 49% stake in Scale AI for $14 bn in 2Q25. The company expects capex to have “similarly significant” dollar growth in 2026; this implies it could be ~$100 bn or ~45% of sales in 2026. There are also concerns on the regulatory front. We could potentially see a ruling in the next several months from the FTC suit which is seeking to unwind prior acquisitions of Instagram and WhatsApp. In addition, the EC’s DMA decision could require modifications that impact its European revenue. Gross leverage is 0.3x although net cash declined sharply to $18.2 bn in 2Q25. We also think Meta could be in the market fairly soon with a jumbo bond deal.
Recommendation Reviewed: July 31, 2025
Recommendation Changed: July 31, 2025
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Search topics about wealth insights and investments.Amazon.com
- Sector: ConsumerTechnology Media and Telecommunications
- Sub Sector: Retail/GrocersTechnology
- Region: US
- Bond: AMZN 4.65 29
- Indicative Yield-to-Maturity (YTM): 4.035 %
- Credit Rating : A1/AA/AA-
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Fundamental View
AS OF 25 Feb 2025- We continue to have confidence in CEO Andy Jassy and the company’s long-term business for both AWS and Stores. The recent operating trends reinforce our views particularly the margin improvement. We continue to believe that Amazon is an underappreciated winner in Generative AI given the breadth of its cloud business and offerings including custom silicon and its platform Bedrock.
- Gross leverage declined to 0.4x and 0.9x on a lease-adjusted basis. While Amazon is increasing its capex spend (along with the other hyperscalers), we are encouraged by its debt reduction and zero shareholder returns. Also, Amazon’s equity cushion is ~$2.2 tn. There are risks related to the FTC suit although we expect those to be addressed by behavioral remedies, and we view a breakup as unlikely.
Business Description
AS OF 25 Feb 2025- Amazon is an e-commerce company which sells a wide range of its own products and those of 3rd party sellers. Amazon offers fulfillment services for 3rd party sellers (FBA) and sells cloud computing services (AWS). In 4Q24, 3rd party units were 62% of total paid units, and FBA units are a majority of 3rd party units.
- In LTM 4Q24, NA segment was 61% of sales, International was 22% of sales, and AWS was 17% of sales.
- Amazon disclosed it surpassed 200 mn Prime members in April 2021. The annual membership was increased in February 2022 from $119 to $139 in the US, although fees vary by country. In mid-2019, Amazon Prime began to transition from 2-day to 1-day shipping. Amazon Prime also offers Prime Video, streaming music, and other benefits.
- In 2006, Amazon launched AWS which remains the leader in cloud computing (IaaS/PaaS). Amazon sells its own devices (e-reader, smart speaker, streaming media player, etc.).
Risk & Catalysts
AS OF 25 Feb 2025- We think Amazon has moderate event risk given its large size (~$2.2 tn market cap).
- While Amazon is increasing its CapEx spend, we are encouraged by the $14 bn reduction in lease-adjusted debt from year-end 2022 through year-end 2024.
- Amazon continues to face regulatory scrutiny. In September 2023, the FTC and 17 states filed a lawsuit against Amazon and accused the company of (1) punishing sellers for offering lower prices elsewhere and (2) making Prime eligibility conditional on usage of fulfillment services. The biggest risk would be a breakup, although we view that as unlikely.
- Amazon’s $14 bn acquisition of Whole Foods has shown its proclivity for large M&A, although the regulatory environment could make large deals challenging.
Key Metric
AS OF 25 Feb 2025| $ mn | 2020 | 2021 | 2022 | 2023 | LTM 4Q24 |
|---|---|---|---|---|---|
| Revenue YoY % | 37.6% | 21.7% | 9.4% | 11.8% | 11.0% |
| EBITDA | 57,284 | 71,994 | 74,593 | 110,305 | 144,162 |
| EBITDA Margin | 14.8% | 15.3% | 14.5% | 19.2% | 22.6% |
| CapEx % of Sales | 12.1% | 13.3% | 11.5% | 8.5% | 12.3% |
| Sh. Ret. % of CFO-CapEx | 0% | 0% | (49%) | 0% | 0% |
| Net Debt | (50,497) | (44,771) | 7,316 | (19,598) | (43,202) |
| Gross Leverage | 0.6x | 0.7x | 1.0x | 0.6x | 0.4x |
| EV / EBITDA | 28.3x | 23.3x | 11.7x | 14.4x | 16.1x |
CreditSight View Comment
AS OF 01 Aug 2025We continue to have confidence in CEO Andy Jassy and the company’s long-term business for both AWS and Stores. While the AWS growth rate is below peers, it is a $123 bn run-rate business with high-teens growth and operating margins in the 30s%. We continue to believe that Amazon will be a winner in Generative AI given the breadth of its cloud business, custom silicon (Trainium, Inferentia), and Bedrock platform. We estimate leverage declined slightly to 0.4x gross and 0.9x lease-adjusted gross. While Amazon’s capex has been ramping, along with other hyperscalers, we are encouraged by its debt reduction over the past few years and zero shareholder returns. Also, Amazon’s market cap is $2.5 tn. There are risks related to the FTC suit although we view a breakup as unlikely.
Recommendation Reviewed: August 01, 2025
Recommendation Changed: May 01, 2024
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Search topics about wealth insights and investments.Export-Import Bank of India
- Sector: Financial Services
- Sub Sector: Financial Services
- Region: India
- Indicative Yield-to-Maturity (YTM): 4.92%
- Credit Rating : ( Baa3 / BBB- / BBB- )
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Fundamental View
AS OF 27 Dec 2024The Export-Import Bank of India (EXIMBK) was founded in 1982. Its credit standing is built upon the key role it plays in the promotion of India’s cross border trade and investment development, as India’s official export credit agency.
EXIMBK is 100% owned by the Government of India. Given its crucial policy role, close governmental links and quasi-sovereign status, we view it as inconceivable that the Indian government would fail to provide EXIMBK with support in a timely manner, if needed.
Business Description
AS OF 27 Dec 2024- EXIMBK presently serves as a growth engine for the internationalization efforts of Indian businesses, facilitating the import of technology and export product development, export production, export marketing, pre- and post-shipment, as well as overseas investment.
- As at F1H25, EXIMBK's loan portfolio was principally made up of export finance (68%) and term loans to exporters (18%), with the remaining 14% split among the financing of overseas investment, import finance, and export facilitation. 44% come under the policy business/face GOI risk while the remaining 56% are to the commercial business.
- By geography, the bank has a primary exposure of 33% to Africa, 56% to Asia (mainly South Asia), 7% to Europe and the Americas, and the remaining to the rest of the world.
Risk & Catalysts
AS OF 27 Dec 2024As a quasi-sovereign issuer with backstops from the Government of India and the Reserve Bank of India (RBI), it is viewed as a proxy to the sovereign. Any downgrade to India’s sovereign rating will flow through to EXIMBK as well.
EXIMBK’s policy role may require it to, at times, take on exposures that could lead to financial losses. This has led to poor asset quality and high impairment charges similar to the public sector commercial banks during the years leading up to the pandemic.
Capital standing, however, is robust thanks to capital infusions from the Government of India which have been stepped up in recent years – INR 50 bn was injected in FY19, followed by infusions of INR 15 bn and INR 13 bn in FY20 and FY21 respectively. The bank received INR 7.5 bn in FY22 despite capital levels remaining strong during the year. No infusions have been made since FY23 due to the comfortable capital position.
Key Metric
AS OF 27 Dec 2024| INR mn | FY21 | FY22 | FY23 | FY24 | 1H25 |
|---|---|---|---|---|---|
| Net Interest Margin (Annual) | 1.84% | 2.19% | 2.29% | 2.06% | 1.70% |
| ROAA | 0.19% | 0.54% | 1.04% | 1.43% | 1.16% |
| ROAE | 1.49% | 3.97% | 7.76% | 11.47% | 9.54% |
| Equity/Assets | 13.23% | 14.12% | 12.87% | 12.06% | 12.31% |
| Tier 1 Capital Ratio | 24.0% | 28.6% | 23.7% | 19.6% | 27.4% |
| Gross NPA Ratio | 6.69% | 3.56% | 4.09% | 1.94% | 2.02% |
| Provisions/Loans | 2.46% | 0.90% | 1.24% | 0.29% | 0.16% |
| Pre-Impairment Operating Profit / Average Assets | 2.13% | 2.31% | 2.41% | 2.12% | 1.68% |
CreditSight View Comment
AS OF 06 Jan 2025Exim Bank of India is the country’s key policy bank with full government support. It provides financial assistance to exporters and importers with a view to promote trade in India. It is 100% owned by the Government of India (GoI) and is a proxy to the India sovereign in international debt markets (quasi-sovereign status). The bank cannot be liquidated without the government’s approval and has a track record of government capital infusions. The bank’s asset quality is back on track after some wobbles in previous years. Capital levels are strong. We maintain a Market perform recommendation on the bank.
Recommendation Reviewed: January 06, 2025
Recommendation Changed: January 04, 2021
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Search topics about wealth insights and investments.BMO Financial
- Sector: Financial Services
- Sub Sector: Consumer Finance and Banking
- Region: Canada
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Fundamental View
AS OF 30 Dec 2024BMO is geographically diversified within Canada & via its commercial banking business in the U.S. and is also well-diversified by revenue with contribution from fee income businesses.
Credit has performed worse than peers in 2024, but losses are likely to stabilize and gradually improve in 2025, based on underwriting and risk management changes in recent years as well as seasoning effects.
Business Description
AS OF 20 Dec 2024- BMO Financial Group is the fourth largest depository institution in Canada with C$1.41 tn in assets as of F4Q24 and a market capitalization of US$70 bn. Total deposits were C$982 bn at F4Q24.
- BMO operates 1,890 branches in Canada and the United States in 2024.
- As of YE23, BMO had 1,013 branches within the United States, mostly in the Midwest. BMO ranked 11th in deposit market share in the U.S. (SNL), with a top-2 share in Illinois.
Risk & Catalysts
AS OF 20 Dec 2024BMO has a strong core deposit base in Canada and in the U.S., which mitigates the potential for a liquidity event. BMO remains well-capitalized relative to requirements with a target CET1 ratio of 12.5% (13.6% at F4Q24).
BMO closed the acquisition of Bank of the West from BNP Paribas in February 2023, significantly expanding its footprint in the U.S. We don’t expect deal integration to have much impact on the credit profile.
We view real estate-related risk in Canada as manageable for BMO given low LTV of exposures in vulnerable markets and conservative underwriting. Commercial real estate accounts for ~10% of total loans, and office is quite manageable at ~1% of total.
Credit deterioration was worse than peers in 2024, leading to elevated provisions in 2H24; BMO has indicated the problem loans were mostly originated in 2021, and provisions should start to improve in 2025.
Key Metric
AS OF 20 Dec 2024| $ mn | FY20 | FY21 | FY22 | FY23 | LTM 4Q24 |
|---|---|---|---|---|---|
| Revenue | 17,461 | 20,509 | 26,727 | 21,694 | 24,095 |
| Net Income | 3,790 | 6,167 | 10,519 | 3,291 | 5,380 |
| ROAE | 0.94% | 0.92% | 0.92% | 0.92% | 0.92% |
| NIM | 1.58% | 1.53% | 1.53% | 1.53% | 1.53% |
| Net Charge-offs / Loans | 0.25% | 0.14% | 0.08% | 0.14% | 0.39% |
| Total Assets | 713,376 | 797,018 | 860,451 | 969,851 | 1,011,587 |
| Unsecured LT Funding | 51,916 | 51,915 | 64,886 | 63,418 | 66,700 |
| CET1 Ratio (Fully-Phased-In) | 11.9% | 13.7% | 16.7% | 12.5% | 13.6% |
CreditSight View Comment
AS OF 29 May 2025We maintain our Market perform for BMO, with our preference within the group remaining to trade up in quality to RBC and TD. Surprising deterioration in asset quality metrics was the story throughout the latter part of F2024, with provisions well above historical average levels. Management has attributed the weakness largely to large wholesale loans to new borrowers originated in 2021, but given the steady climb in reserve coverage as well as changes to risk management and underwriting in recent years, BMO is confident quarterly provision ratios should moderate across F2025 alongside further potential benefits from efficiency initatives. This appeared to be the case thus far in F1H25.
Recommendation Reviewed: May 29, 2025
Recommendation Changed: August 26, 2020
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Fundamental View
AS OF 22 Aug 2024Qatar National Bank (QNB) is considered a quasi-sovereign entity due to its state ties and ownership. It dominates the domestic market with over a 53% share in total assets, far surpassing the market share of many leading banks in their respective countries.
As the largest bank in the Gulf Cooperation Council (GCC) region by total assets, QNB has shown a strong performance in its net interest margin, cost-to-income ratio, and return on equity (ROE). Its credit is also supported by solid capital adequacy ratios and steady loan growth.
The bank’s liquidity coverage ratio is adequate at 146%, although it has been volatile. Liquidity risk is moderate, given the bank’s loan-to-deposit ratio is nearly 100%, compared to a safer metric of 80% or below seen in regional peers such as UAE banks.
Business Description
AS OF 22 Aug 2024- QNB is the largest bank in the six-state Gulf Cooperation Council (GCC) region. Listed on the Qatar Stock Exchange, the State of Qatar owns more than 50% stake in QNB through its sovereign wealth fund, the Qatar Investment Authority (QIA).
- QNB constitutes the majority of the Qatari banking system and serves as the principal provider of credit and liquidity to the local economy.
- The bank's operations are segmented into domestic Corporate Banking, Consumer Banking, Asset Management and Wealth Management divisions, as well as International operations.
- QNB operates in more than 28 countries, with a significant presence in Turkey and Egypt through its subsidiaries QNB Finansbank and QNB Al Ahli, respectively.
Risk & Catalysts
AS OF 22 Aug 2024Qatar’s economic fundamentals are robust, endowed with the world’s largest reserves of liquefied natural gas (LNG). The economy is well positioned amid the current geopolitical climate. However, sovereign borrowing has been declining, creating a negative volume driver for QNB.
QNB’s asset quality is better than major peers in the GCC region, though it falls short compared to Asian banks in terms of gross NPL ratios, loan loss coverage, and credit costs.
The bank benefits from geographical diversification, with a presence in 28 markets that account for 21% of its loan portfolio. Nonetheless, it has significant operations in Egypt and Turkey, which are subject to high financial and geopolitical risks.
Key Metric
AS OF 22 Aug 2024| QAR mn | 2Q24 | Y23 | Y22 | Y21 | Y20 |
|---|---|---|---|---|---|
| Return on Equity | 18.8% | 17.8% | 17.5% | 17.1% | 16.1% |
| Total Revenue Margin | 3.1% | 3.2% | 3.0% | 2.6% | 2.6% |
| Cost/Income | 23.9% | 20.3% | 20.0% | 22.5% | 24.4% |
| CET1 Ratio | 15.0% | 16.0% | 14.6% | 14.2% | 14.0% |
| Liquidity Coverage Ratio | 185% | 206% | 104% | 147% | 164% |
| Gross NPL Ratio | 2.9% | 3.0% | 2.8% | 2.3% | 2.1% |
CreditSight View Comment
AS OF 20 Mar 2024The interdependence and the state’s ownership stake effectively make Qatar National Bank (QNB) a quasi-sovereign entity. The largest bank in the MEA region’s robust and low-risk balance sheet underpins our view that it is a solid credit. Qatar is the world’s largest exporter of liquefied natural gas (LNG) and the current geopolitical tension could further strengthen its position. The bank retains exposure to Turkey, where asset quality ratios have been improving.
Recommendation Reviewed: March 20, 2024
Recommendation Changed: March 21, 2019
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Fundamental View
AS OF 29 Feb 2024Toyota’s slower ramp of battery electric vehicle (BEV) production and sales relative to its peers was a common investor concern a year ago. However, with the recent slowdown in consumer adoption of BEVs in North America and Europe and Toyota’s dominance in the hybrid electric vehicle (HEV) market, those concerns have abated, at least for the time being. Importantly, Toyota management has indicated its profitability of its HEV portfolio is on par with its ICE portfolio profitability. We continue to believe that Toyota’s market leading position in HEVs provides consumers with a more eco-friendly option than traditional ICE vehicles that can serve as a bridge to EVs while the charging infrastructure is built out and the cost of producing EVs is reduced.
Business Description
AS OF 29 Feb 2024- Toyota Motor Corp. (TMC) engages in the manufacture and sale of motor vehicles and parts. The Financial Services segment offers purchase or lease financing to Toyota vehicle dealers and customers. It also provides retail leasing through lease contracts purchased by dealers. The company was founded by Kiichiro Toyoda on August 28, 1937, and is headquartered in Toyota, Japan. In July 2000, the company established Toyota Financial Services Corporation (TFSC), a wholly owned subsidiary, to oversee the management of its finance companies worldwide.
- Toyota Financial Services Corporation (TFSC), a wholly owned subsidiary of TMC, oversees the management of Toyota's finance companies worldwide. Toyota Motor Credit Corporation (TMCC) is the company’s principal financial services subsidiary in the United States and is an indirect wholly owned subsidiary. Under terms of the credit support agreement between TFSC and TMCC, TFSC agrees to: (1) maintain 100% ownership of TMCC; (2) cause TMCC and its subsidiaries to have a tangible net worth of at least $100,000; (3) make sufficient funds available to TMCC so that it will be able to service the obligations arising out of its own bonds, debentures, notes and other investment securities and commercial paper. The terms of the credit support agreement between TMC and TFSC are very similar to the terms of the TFSC and TMCC credit support agreement.
Risk & Catalysts
AS OF 29 Feb 2024Toyota Motor Credit Corporation (TMCC) credit metrics stable. TMCC F3Q24 earnings before taxes increased 50% YoY and 3x sequentially. At F3Q24 the delinquency rate expanded 10 bp YoY to 0.9%, nearly double pre-pandemic levels, while the retail charge-off rate expanded 10bp YoY to 0.7%. The company notes that changes in interest rates or unemployment could increase credit losses and additional provisioning. Additionally, elevated prices and high borrowing costs have impacted some consumers’ ability to make scheduled payments resulting in an increase in consumer delinquencies and charge-offs.
Key Metric
AS OF 29 Feb 2024| ¥ bn | FY20 | FY21 | FY22 | FY23 | F3Q24 |
|---|---|---|---|---|---|
| Total Company Earning Assets | 110,621 | 116,546 | 117,659 | 120,018 | 129,320 |
| Cash and Investments | 6,790 | 8,195 | 7,670 | 6,398 | 6,458 |
| Total Liquidity | 31,390 | 35,895 | 36,070 | 33,498 | 35,058 |
| Unsecured Debt | 83,172 | 85,513 | 82,288 | 78,949 | 85,744 |
| Secured Debt | 14,568 | 24,212 | 26,864 | 32,736 | 33,262 |
| Total Debt | 97,740 | 109,725 | 109,152 | 111,685 | 119,006 |
| Allowance % Retail Rece. | 0.86% | 1.64% | 1.66% | 1.83% | 1.81% |
| Allowance / Net Charge-offs | 1.58x | 4.50x | 6.68x | 3.03x | 2.56x |
| Net Charge-offs % Avg. Receivable | 0.56% | 0.39% | 0.26% | 0.63% | 0.72% |
| 30+ Day Delinquency Rate | 1.8% | 1.2% | 1.8% | 2.3% | 3.1% |
CreditSight View Comment
AS OF 13 May 2024We reiterate our Underperform recommendations on notes of Toyota Motor Co. (TOYOTA: A1/A+/A+; S/S/S) and Toyota Motor Credit Corporation (TMCC: A1/A+/A+; S/S/S) based primarily on relative value. Toyota reported record profit in FY24 and announced increased investments in labor, suppliers, and BEVs in FY25 that it expects to reduce operating profit 20%. We applaud the investments that we believe should further its new energy vehicle offerings well beyond its hybrid electric vehicles (HEVs), which account for more than one-third of its sales. We believe the Toyota bond complex is fairly valued at current levels but will continue to underperform the broader market and the A-rated index owing to its high-A credit rating and short duration.
Recommendation Reviewed: May 13, 2024
Recommendation Changed: January 13, 2023
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