Nissan raises 5 billion with high-yield and convertible bonds
Yokohama-based company issues debt to refinance maturing debt, support restructuring and cover losses and declining margins after downgrade to junk
2' min read
2' min read
At a time of strong financial and strategic pressure, Nissan Motor is launching a maxi bond market operation to raise up to USD 5 billion. The Japanese manufacturer, in the midst of restructuring under the leadership of new CEO Ivan Espinosa, in office since 1 April, has launched the placement of senior unsecured bonds in dollars and euros for USD 4 billion, in addition to a USD 1 billion convertible loan, equivalent to 150 billion yen.
The objective is clear: to refinance part of the maturing debt and, above all, to regain momentum in an increasingly competitive and costly sector, where the transition to electric power requires huge investments. But the context is not favourable. The main ratings - from Fitch to Moody's - have downgraded Nissan to 'junk', signalling high risks. Fitch, in particular, notes lower operating and cash margins than direct competitors such as Ford or Stellantis, while recognising that the company maintains low leverage and a good cash position.
The offer includes three dollar tranches with maturities of 5, 7, and 10 years, each of at least USD 750m. The yields offered range between 7% and 8%, well above the average for bonds with the same rating. On the European side, two 4- and 8-year euro tranches are planned, with a minimum of EUR 500m each, and coupons quoted in the high 5-6% range.
The collection is part of a broader 1 trillion yen-plus plan, which also includes sale & lease back transactions - including the Yokohama headquarters building - and a possible $1.4 billion syndicated loan guaranteed by the UK Export Finance agency, the outcome of which is, however, unclear.
Meanwhile, Nissan is studying solutions to contain the employment impact of restructuring. Under discussion, according to Reuters sources, is a possible agreement with Foxconn for the use of the Oppama plant, at risk of closure, where the Taiwanese group could produce electric vehicles. A move that would avoid cutting the 3,900 jobs linked to the site.
