Moody’s lifts credit rating outlook for Toyota and Honda to stable

Article by Anita Panait, on June 28, 2013

Moody’s Investors Service Inc. has upgraded the credit-rating outlook of Japanese carmakers Toyota and Honda to stable from negative, citing their recovery from natural disasters and the benefits of a depreciating yen. Moody’s also affirmed their credit ratings at Aa3 for Toyota and A1 for Honda, according to statements by the rating company.

The credit-rating outlook upgrade for Toyota comes a month after the carmaker doubled the amount raised from a bond sale, its first in eight months. Toyota sold JPY60 billion ($615 million) in bonds in a two-part offering on May 30, 2013, including three-year notes tagged at 0.289 percent, according to data compiled by Bloomberg. 

The carmaker initially targeted to raise JPY30 billion from the bond sale. Weighted average coupons on outstanding bonds sold by Toyota have dropped to 2.63 percent from 4.07 percent in the fourth quarter of 2009, according to data compiled by Bloomberg.

Moody’s said in the statement that Toyota has effectively recovered from production disruptions "stemming from the earthquake and tsunami in 2011" as well as from the recalls that "damaged its standing in the US market in 2009.” Moody’s expects Toyota to successfully expand its sales and earnings over the next one to two years.

Moody’s said in a separate statement that Honda’s outlook change reflects the “substantial improvement” in its operating performance in the previous year and the expectation that the improvements will be sustained. [source: Bloomberg]

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