Moody’s downgrades Nissan credit rating to junk status
Moody’s drops Nissan rating, warns of weak cash flow
Nissan Motor Co. has suffered a significant financial setback after Moody’s Ratings downgraded its credit status to junk, reflecting a deteriorating financial outlook and ongoing operational challenges.
The agency lowered Nissan’s senior unsecured rating from Baa3 to Ba1 while maintaining a negative outlook. In a report, senior analyst Dean Enjo highlighted concerns over Nissan’s ability to execute its restructuring plan, revamp its aging product lineup, and navigate global trade policies, reports Reuters.
As part of its turnaround strategy, Nissan has announced a 9,000-person workforce reduction and a 20% cut in global manufacturing capacity. However, Moody’s warned that the company’s free cash flow, which has already turned negative this fiscal year, is unlikely to recover in the next financial cycle beginning in April.
The agency also cited risks from potential U.S. tariffs on Nissan’s production in Mexico, which could further weigh on its recovery. Despite these challenges, Nissan maintains a substantial cash reserve, which Moody’s believes will provide sufficient liquidity to manage its financial obligations over the next 12 months.
Honda Open to Merger Talks—With a Condition
Adding to Nissan’s uncertainty, Honda Motor Co. is reportedly willing to resume merger talks—but only if Nissan’s CEO, Makoto Uchida, steps down. According to the Financial Times, which cited sources familiar with the discussions, Honda sees leadership change as a prerequisite for forming what would become the world’s fourth-largest automaker.
Nissan and Honda previously explored a potential alliance but ended talks last week, leaving Nissan to navigate its financial difficulties alone. The company has said it will provide an update on its restructuring efforts within the next month.
Additionally, Honda Motor is open to resuming merger negotiations with Nissan Motor—potentially forming the world’s fourth-largest automaker—but only if Nissan CEO Makoto Uchida steps down.
