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Pricing Supplement dated May 5, 1994
(To Prospectus dated March 9, 1994 and Rule 424 (b)(3)
Prospectus Supplement dated March 9, 1994) File No. 33-52359
TOYOTA MOTOR CREDIT CORPORATION
Medium-Term Note - Indexed
______________________________________________________________________________________
Face Amount: $5,000,000 Trade Date: May 5, 1994
Issue Price: 100% Original Issue Date: May 10, 1994
Interest Rate: 11.16% Net Proceeds to Issuer: $4,993,750
Interest Payment Date: February 10, 1995 Agent's Discount or Commission:0.125%
Stated Maturity Date: February 10, 1995
______________________________________________________________________________________
Calculation Agent: Merrill Lynch Capital Services, Inc.
Day Count Convention:
[x] 30/360 for the period from May 10, 1994 to February 10, 1995
[ ] Actual/Actual for the period from to
[ ] Other (see attached) to
Redemption:
[x] The Notes cannot be redeemed prior to the Stated Maturity Date.
[ ] The Notes may be redeemed prior to Stated Maturity Date.
Initial Redemption Date:
Initial Redemption Percentage: %
Annual Redemption Percentage Reduction: % until Redemption
Percentage is 100% of the Principal Amount.
Repayment:
[x] The Notes cannot be repaid prior to the Stated Maturity Date.
[ ] The Notes can be repaid prior to the Stated Maturity Date at the option of
the holder of the Notes.
Optional Repayment Date(s):
Repayment Price: %
Currency:
Specified Currency: U.S. dollars
(If other than U.S. dollars, see attached)
Minimum Denominations:
(Applicable only if Specified Currency is other than U.S. dollars)
Original Issue Discount: [ ] Yes [x] No
Total Amount of OID:
Yield to Maturity:
Initial Accrual Period:
Form: [x] Book-entry [ ] Certificated
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___________________________
Merrill Lynch & Co.
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ADDITIONAL TERMS OF THE NOTES
Principal Payment at Maturity
Principal (the "Indexed Principal Amount") payable on the Notes
offered by this Pricing Supplement (the "Notes") will be payable in
U.S. dollars on the date of Maturity in an amount determined in
accordance with the following formula:
Face Amount x [1 + (3 x [(Fx - 103.06) / Fx])]
provided, however, that the payment in respect of the Indexed Principal
Amount shall in no event be less than zero.
The holders of the Notes may exercise an option (the "Lock Option")
to lock in the exchange rate component of the above formula, as such
component is determined on the related Determination Date. Once the
Lock Option has been exercised, the election is binding and
irrevocable. The Lock Option may only be exercised in the minimum
denomination of $5,000,000 Face Amount, and may only be exercised
through written notice, delivered to the Calculation Agent, signed by
or on behalf of all the holders of the Notes. The notice to exercise
the Lock Option must be delivered to the Calculation Agent on a New
York Business Day that is subsequent to July 10, 1994 but is at least
two New York Business Days prior to the Stated Maturity Date (such
delivery date being the "Notice Date"). The Lock Option will be
effective as of the Notice Date. The Notice Date must be a New York
Business Day and must be no later than the Stated Maturity Date.
For purposes of the Notes, the following terms shall have the
following meanings:
If the Lock Option is not exercised, "Fx" means the mid-market spot
exchange rate for U.S. dollars in exchange for Japanese yen
(expressed in terms of Japanese yen per U.S. dollar) as displayed
on Reuters Page "1FED" beside the caption "YEN" (or such other page
as may replace such page on such service for the purpose of
displaying the spot exchange rate) as of 10 A.M., New York time on
the Determination Date. If no rate appears on such page as of such
time by 3 P.M., New York time on such Determination Date, Fx on
such Determination Date will be determined as follows. The
Calculation Agent will request each of five Reference Dealers to
provide the Calculation Agent with its spot bid quotation for the
purchase of U.S. dollars in exchange for Japanese yen as of 10
A.M., New York time on the Determination Date. Fx will be the
arithmetic mean of the quotes remaining after disregarding the
highest and lowest quotes (or if any quotes are equal, one of such
quotes) and rounded to the second decimal place, rounding up if the
third decimal place, without regard to rounding, is five or higher
and otherwise truncating after the second decimal place. In the
event the Calculation Agent is unable to obtain quotations from at
least five Reference Dealers, Fx will be determined by the
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Calculation Agent by such method as the Calculation Agent
determines, in good faith, in its sole discretion.
If the Lock Option is exercised, "Fx" means the forward bid rate
(for settlement on the Stated Maturity Date) on the Determination
Date at which a Reference Dealer would purchase U.S. dollars in
exchange for Japanese yen (expressed in terms of Japanese yen per
U.S. dollar) determined as follows. The Calculation Agent will
request each of five Reference Dealers to provide the Calculation
Agent with its forward bid quotation (for settlement on the Stated
Maturity Date) for the purchase of U.S. dollars in exchange for
Japanese yen as of 10 A.M., New York time on the Determination
Date. Fx will be the arithmetic mean of the quotes remaining after
disregarding the highest and lowest quotes (or if any quotes are
equal, one of such quotes) and rounded to the second decimal place,
rounding up if the third decimal place, without regard to rounding,
is five or higher and otherwise truncating after the second decimal
place. In the event the Calculation Agent is unable to obtain
quotations from at least five Reference Dealers, Fx will be
determined by the Calculation Agent by such method as the
Calculation Agent determines, in good faith, in its sole
discretion.
"Calculation Agent" means Merrill Lynch Capital Services, Inc. In
the absence of manifest error, the determination by the Calculation
Agent of the Indexed Principal Amount payable under the Notes shall
be final and binding on TMCC and the holders of the Notes.
"Determination Date" means the second New York Business Day prior
to the date of Maturity, or, in the event that the holders of the
Notes have elected to exercise the Lock Option on a New York
Business Day that is earlier than such date of Maturity, then such
Notice Date.
"New York Business Day" means any day, other than a Saturday or
Sunday, that is a day on which commercial banks are generally open
for business (including dealings in foreign exchange and foreign
currency) in New York, New York.
"Reference Dealer" means any major bank or banking or investment
banking corporation in New York City selected in good faith by the
Calculation Agent which will provide quotations on Fx or the
yen/dollar exchange rate.
Certain U.S. Tax Considerations
The following is a summary of the principal United States
federal income tax consequences of ownership of the Notes. The summary
concerns initial U.S. Holders (as defined in the Prospectus
Supplements) who hold the Notes as capital assets and does not deal
with tax consequences to special classes of holders such as dealers in
securities or currencies, persons who hold the Notes as a hedge against
currency risks or who hedge any currency risks of holding the Notes,
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tax-exempt investors, or U. S. Holders whose functional currency is
other than the United States dollar. The discussion below is based
upon the Internal Revenue Code of 1986, as amended, and final,
temporary and proposed United States Treasury Regulations. Persons
considering the purchase of the Notes should consult with and rely
solely upon their own tax advisors concerning the application of United
States federal income tax laws to their particular situations as well
as any consequences arising under the laws of any other domestic or
foreign taxing jurisdiction.
Except where otherwise indicated below, this summary
supplements and, to the extent inconsistent, replaces the discussion
under the caption "United States Taxation" in the Prospectus
Supplement.
General. There are no regulations (except the 1986 Proposed
Regulations described below), published rulings or judicial decisions
involving the characterization, for United States federal income tax
purposes, of securities with terms substantially the same as the Notes.
Although the matter is not entirely free from doubt and the Notes may
be subject to different characterizations by the Internal Revenue
Service (the "IRS"), this discussion assumes that the Notes will be
treated as debt in their entirety. The Company intends to treat the
Notes as debt obligations of the Company for United States federal
income tax purposes and when required, intends to file information
returns with the IRS in accordance with such treatment in the absence
of any change or clarification in the law, by regulation or otherwise,
requiring a different characterization. If the Notes are not in fact
treated as debt obligations of the Company for United States federal
income tax purposes, then the United States federal income tax
treatment of the purchase, ownership and disposition of the Notes could
differ from that discussed below.
U.S. Holders. Under general principles of current United
States federal income tax law, payments of interest on a debt
instrument generally will be taxable to a U.S. Holder as ordinary
interest income at the time such payments are accrued or are received
in accordance with the U.S. Holder's regular method of tax accounting.
In addition, under Section 988 of the Internal Revenue Code of 1986, as
amended (the "Code") and the regulations promulgated thereunder, in the
case of a debt instrument that provides for payments the amounts of
which are determined by reference to the value of one or more
nonfunctional currencies (generally, a currency other than the U.S.
dollar), any gain or loss realized with respect to such debt instrument
by reason of changes in foreign currency exchange rates generally must
be treated as foreign currency gain or loss and must be treated as
ordinary income or ordinary loss as the case may be, to the extent such
foreign currency gain or loss does not exceed the total gain or loss
realized on such debt instrument. Although Code Section 988 and the
regulations promulgated thereunder do not specifically address the
proper treatment of instruments such as the Notes and therefore the
matter is not free from doubt, under the foregoing principles, the
amount payable with respect to a Note at the 11.16% Interest Rate (the
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"Interest Payment") should be includible in income by a U.S. Holder as
ordinary interest at the time the Interest Payment is accrued or
received (in accordance with the U.S. Holder's regular method of tax
accounting).
Under these same principles, upon retirement of a Note, the
excess of the Indexed Principal Amount over the Face Amount (the
"Supplemental Face Amount"), if any, should be treated as contingent
interest and generally should be includible in income by a U.S. Holder
as ordinary interest on the date that the Indexed Principal Amount is
accrued (i.e., determined) or when such amount is received (in
accordance with the U.S. Holder's regular method of tax accounting).
However, any portion of the Supplemental Face Amount that is
attributable to changes in foreign currency exchange rates occurring
between the Original Issue Date and the date on which the Indexed
Principal Amount is determined (the "Determination Date") should
constitute foreign currency gain under Section 988 of the Code and
should be treated as ordinary income (other than ordinary interest
income). However, if upon maturity the Indexed Principal Amount is
equal to or less than the Face Amount, then, under general principles
of current United States federal income tax law, a Note should be
treated as retired on the date of Maturity for an amount equal to the
Indexed Principal Amount. A U.S. Holder generally would recognize a
short-term capital loss under such circumstances in an amount equal to
the excess of the U.S. Holder's tax basis in the Note (i.e., the Face
Amount) over the Indexed Principal Amount. However, any portion of
such loss that is attributable to changes in foreign currency exchange
rates occurring between the Original Issue Date and the Determination
Date should constitute foreign currency loss under Section 988 of the
Code and should be treated as ordinary loss. Upon the sale or exchange
of a Note prior to the date of Maturity, a U.S. Holder should recognize
taxable gain or loss equal to the difference between the amount
realized upon such sale or exchange (other than amounts representing
accrued and unpaid interest) and the Face Amount (i.e., the U.S.
Holder's tax basis in the Note). Such gain or loss should be short-
term capital gain or loss. Nevertheless, any such gain or loss
realized upon the sale or exchange of a Note prior to the date of
Maturity by reason of changes in foreign currency exchange rates
occurring between the Original Issue Date and the date of such sale or
exchange should constitute foreign currency gain or loss under Section
988 of the Code and should be treated as ordinary income or loss, as
the case may be.
In 1986, the Treasury Department issued proposed regulations
(the "1986 Proposed Regulations") under the original issue discount
provisions of the Code concerning contingent payment debt obligations.
If the 1986 Proposed Regulations are ultimately adopted in their
current form, such regulations could apply to the Notes and, if
applied, would cause the timing and character of income, gain or loss
recognized on a Note to differ from the timing and character of income,
gain or loss recognized on a Note discussed above.
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The 1986 Proposed Regulations set forth a special set of rules
applicable to debt instruments that fail to provide for total
noncontingent payments at least equal to their issue price. Under
these rules, where the total noncontingent payments on a debt
instrument are less than its issue price, the debt instrument will be
treated as having contingent interest and principal and payments on the
debt instrument will be taxed as described below regardless of whether
such payments are designated as "principal" or "interest." Applying
these rules, the Interest Payment is treated as a return of principal.
Then, if the sum of the Interest Payment and the Indexed Principal
Amount (the "Total Redemption Amount") equals or exceeds the Face
Amount, the Notes would be treated as having been retired on the date
of Maturity for an amount equal to the Face Amount. The excess of the
Total Redemption Amount over the Face Amount (the "Excess Amount"), if
any, would be treated as ordinary interest and would be includible in
income by a U.S. Holder on the Determination Date, regardless of the
U.S. Holder's regular method of tax accounting. In addition, under
this set of rules, any portion of the Excess Amount that is
attributable to changes in foreign currency exchange rates occurring
between the Original Issue Date and the Determination Date should be
treated as foreign currency gain under Code Section 988. Under these
rules, if the Total Redemption Amount is less than the Face Amount,
then a U.S. Holder should recognize a short-term capital loss in an
amount equal to the excess of the Face Amount over the Total Redemption
Amount. However, any portion of such loss that is attributable to
changes in foreign currency exchange rates occurring between the
Original Issue Date and the Determination Date should constitute
foreign currency loss under Section 988 of the Code and should be
treated as ordinary loss.
Moreover, applying the 1986 Proposed Regulations, in the event
that the Lock Option is exercised six months or more prior to the
Stated Maturity Date, an amount equal to the excess of the Indexed
Principal Amount over the present value (determined by using a discount
rate equal to the short-term applicable federal rate in effect on the
Original Issue Date) of the Indexed Principal Amount (the "Discounted
Indexed Principal Amount") should be treated as original issue discount
and a U.S. Holder should be required to include such discount into
income under a constant yield method over the remaining term of the
Note. In addition, under such circumstances, if the sum of the
Interest Payment and the Discounted Indexed Principal Amount exceeds
the Face Amount, then such excess should be includible in income by a
U.S. Holder as ordinary interest on the date that the Indexed Principal
Amount became fixed (regardless of the U.S. Holder's regular method of
tax accounting) and the Note would be treated as having been retired on
the date of Maturity for an amount equal to the Face Amount. Any
portion of such excess which is attributable to changes in foreign
currency exchange rates occurring between the Original Issue Date and
the Determination Date should be treated as foreign currency gain under
Section 988. If, however, the sum of the Interest Payment and the
Discounted Indexed Principal Amount is less than or equal to the Face
Amount, the Note would be treated as having been retired on the date of
Maturity for an amount equal to the sum of the Interest Payment and the
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Discounted Indexed Principal Amount, and the U.S. Holder should
recognize a short-term capital loss in the amount equal to the excess
of the Face Amount over such amount. Any portion of such loss
attributable to changes in foreign currency exchange rates occurring
between the Original Issue Date and the Determination Date should be
treated as ordinary loss.
There is no assurance that the 1986 Proposed Regulations will be
adopted or, if adopted, adopted in their current form to apply to
short-term obligations or to debt instruments providing for one or more
payments the amount of which are determined by reference to a foreign
currency (such as the Notes). On January 19, 1993, the Treasury
Department issued proposed regulations (the "1993 Proposed
Regulations"), concerning contingent payment debt obligations, which
would have replaced the 1986 Proposed Regulations and would have
provided for a set of rules with respect to the timing and character of
income and loss recognition on contingent payment debt obligations that
differ from the rules contained in the 1986 Proposed Regulations with
respect to the timing and character of income and loss recognition.
The 1993 Proposed Regulations, which would have applied to debt
instruments issued 60 days or more after the date the 1993 Proposed
Regulations became final, generally provided for several alternative
timing methods which would have required annual interest accruals to
reflect either a market yield for the debt instrument, determined as of
the issue date, or a reasonable estimate of the performance of
contingencies. The amount of interest deemed to accrue in a taxable
year pursuant to such methods would have been currently includible in
income by a U.S. Holder, with subsequent adjustments to the extent that
the estimate of income was incorrect. In addition, under the 1993
Proposed Regulations, any gain realized on the sale, exchange or
retirement of a contingent payment debt obligation generally would have
been treated entirely as ordinary interest income and any loss realized
on the sale, exchange or retirement of a contingent payment debt
obligation generally would have been treated entirely as a capital
loss. However, on January 22, 1993, the United States Government's
Office of Management and Budget announced that certain proposed
regulations which had not yet been published in the Federal Register,
including the 1993 Proposed Regulations, had been withdrawn. In
addition, it is unclear to what extent, if any, the 1993 Proposed
Regulations would have applied to debt instruments providing for one or
more payments determined, in whole or in part, by reference to the
value of foreign currency. Accordingly, it is unclear whether the 1993
Proposed Regulations will be re-proposed or, if re-proposed, what
effect, if any, such regulations would have on the Notes. It should
also be noted that proposed Treasury regulations are not binding upon
either the IRS or taxpayers prior to becoming effective as temporary or
final regulations. Prospective investors in the Notes are urged to
consult their own tax advisors regarding the application of the 1986
Proposed Regulations, if any, and the effect of possible changes to the
1986 Proposed Regulations.
