Moody’s Ratings has downgraded Nissan Motor’s credit rating to junk status, citing concerns over the company’s restructuring efforts, ageing product range, and global trade conditions. The downgrade reduces Nissan’s senior unsecured rating to Ba1 from Baa3, with a negative outlook. The ratings agency flagged risks in Nissan’s turnaround programme, which includes a plan to cut 9,000 jobs and reduce global manufacturing capacity by 20%.
The company is struggling with weaker-than-expected performance in key markets like the US and China, which has led to a concerning outlook for its financial health. Moody’s predicts that Nissan’s free cash flow, which has turned negative in the current fiscal year, will remain in the red through the next fiscal year starting in April. Furthermore, the global trade environment, particularly potential US import tariffs on vehicles made in Mexico, could further impact the company’s cash flow recovery.
Despite these challenges, Moody’s notes that Nissan holds substantial cash reserves that should help cover its negative cash flow and debt obligations over the next 12 months.
In addition to the downgrade from Moody’s, last month, S&P Global Ratings also revised Nissan’s credit outlook to negative while affirming its BB+ rating. Recently, Nissan ended talks with Honda regarding a potential merger, deepening the uncertainty surrounding its future. The company has promised to provide an update on its restructuring programme in the coming month.