Trump/Cook, Nissan weakness, more tariffs and gold - what’s moving markets
Investing.com-- Moody’s Ratings downgraded Nissan Motor’s (TYO:7201) debt rating on Friday and maintained a negative outlook, citing risks associated with the Japanese automaker’s weak cash position, shrinking margins and worsening car demand.
Moody’s downgraded Nissan (OTC:NSANF) to Ba1 from Baa3 with a negative rating outlook, indicating that the company could be downgraded further.
Moody’s also raised concerns over Nissan’s new restructuring plans, the renewal of the company’s “aging product range” and global trade policies.
“The rating action reflects Nissan’s weak profitability driven by slowing demand for its ageing model portfolio. A slowdown has been evident in China since early fiscal 2023 (which ended March 2024) but now its largest consolidated market – the US – faces challenges,” Moody’s said in a statement on Friday.
A Ba1 rating is below investment grade, with Moody’s now joining peer S&P in rating Nissan at junk status. Fitch still rates the company in its lowest-tier investment grade, BBB-, although all three of the big three ratings agencies have a negative outlook on the company.
The downgrade comes just weeks after talks over a merger with Honda (NYSE:HMC) Motor Co Ltd (TYO:7267) broke down. Investors had regarded a Honda merger as one of the last few lifelines for Nissan, which has been grappling with steadily deteriorating finances.
Moody’s said that Nissan was lagging its peers in the growing segment of hybrid vehicles in the U.S.- a sector largely dominated by larger Japanese rival Toyota (NYSE:TM) Motor Corp (H:7203).
The ratings agency also raised doubts over Nissan being able to execute its plans to cut costs by 400 billion yen ($2.66 billion) by end-2026.
Moody’s rating on Nissan now matches that of the automaker’s European partner Renault (EPA:RENA), although the ratings agency is positive on Renault’s outlook.