Toyota Motor Corp. is borrowing US$2.5 billion through itsfinance company to help support the sale of clean cars, marking thefirst U.S. corporate green bond deal this year.

Toyota Motor Credit Corp. is selling the debt in as many asthree parts, according to a person with knowledge of the matter.Only the 10-year security will be green, and it will yield 65 basispoints (bps) above Treasuries, after initially discussing in thehigh 70 bps range, the person said, asking not to be identified asthe details are private. Toyota will cap the green portion of thedeal at $750 million, the person said.

The proceeds of the other securities—a floating-rate note due2021 and five-year fixed-rate bond—will be used for generalcorporate purposes, the person said.

Toyota has outlined a green bond programthat will help finance new loans and lease contracts for eligibleToyota and Lexus vehicles, such as gasoline-electric hybrids likethe Prius. Monday's issuance will add to the $5.3 billion of greenbonds that Toyota Motor Credit had issued through the end of2019.

The deal marks the first U.S. corporate green bond of the year,according to data compiled by Bloomberg. Corporations andgovernments globally borrowed a record $204 billion worth of greenbonds last year, from about $136 billion in 2018, the data show.Combined with sustainability debt, issuance is expected to climb to$400 billion this year, according to Moody's Investors Service.

BNP Paribas SA, Citigroup Inc., Credit Agricole SA, JPMorganChase & Co. and Mizuho Financial Group Inc. are managing ToyotaMotor Credit's bond sale, the person said.

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