Nissan's Rating Fallen to Junk Status By Moody's, Expecting Negative Outlook

On Friday, Moody's Rating officially revealed that it had downgraded the rating of Nissan Motor's credit by one notch to junk status, highlighting a weak and worsening outlook for this Japanese automaker's credit profile.

Maintaining a negative outlook, the leading credit-rating firm cut Nissan's senior unsecured rating from Baa3 to Ba1.

Senior analyst Dean Enjo, in a shared report, stated, "risks associated with the implementation of its new restructuring plan, the renewal of its aging product range and global trade policies."

Nissan Motor has been reportedly working on a turnaround program under which it aims to reduce its global workforce by 9,000 people and manufacturing capabilities by 20% amid the worse-than-expected performance in top automobile markets, US and China.

Moody also revealed it expected the free cash flow of Nissan's car business, which has now turned negative in the current fiscal year, to remain red throughout the fiscal year starting with April.

Nissan's cash flow recovery was at risk from the global trade landscape with potential US import tariffs on meaningful production facilities in Mexico, Moody's stated. It added that Nissan's automotive business had satisfactory cash holdings to ensure sufficient liquidity for its negative free cash flow and debt maturities over 12 months.

Last month, S&P Global Ratings reduced the automaker's credit outlook to negative and provided a BB+ rating.

Earlier this week, Nissan Motor closed its talk with Honda Motor for a possible merger, and now it's time to provide more details on the turnaround program within a month.