Moody's Cite Toyota Reliance On Local Suppliers As Key Weakness In Negative Outlook

Moody’s has assigned an “Aa3” rating to Toyota Motor Corp. new bonds, but also issued a negative outlook warning for the company.

“Toyota’s Aa3 rating and negative outlook consider the initiatives that the company has undertaken to restore its product competitiveness and strengthen operating performance, after several years of weak results,” the ratings agency said in a note released Thursday.

“While disruptions caused by several natural disasters contributed to the period of underperformance, the company’s financial results have also suffered from product quality issues, market share erosion, and cost pressures exacerbated by volatile market conditions. Because it is more reliant than its peers on units and components exported from Japan, Toyota’s earnings have significantly weakened because of the fluctuation in the currency market since the financial crisis of 2008-09.”

Toyota has issued 60 billion yen worth of new debt securities: 40 billion yen worth of bonds due in 2016 and 20 billion yen worth of bonds due in 2023.




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