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Automobile

Nissan to raise $940m with first bond offering in 3 years

Automaker to invest in new tech as it makes progress on corporate reform

Nissan will spend funds raised from bonds on developing self-driving vehicles, like this one for the Easy Ride service.   © Reuters

TOKYO -- Nissan Motor will soon issue nearly 100 billion yen ($939 million) in bonds, its first market fundraising in three years, concluding that progress in corporate reform will help repair the investor trust damaged by the arrest of then-Chairman Carlos Ghosn.

The automaker filed Tuesday for shelf registration with the finance bureau serving the Tokyo area. The filing shows that it intends to issue 250 billion yen of bonds in total over the next two years, including the upcoming 100 billion yen offering.

Nissan has begun surveying demand among institutional investors through brokerages. The exact amount to be raised and the coupon rate will be set based on the response.

This will mark Nissan's first bond float since the 125 billion yen issued in 2016. The funds will be used in part to finance research and development into autonomous vehicles, hybrids and other next-generation fields.

The rest will go toward equipment upgrades and the redemption of past debt. Nissan is due to redeem 100 billion yen of bonds in fiscal 2020.

This June, Nissan formally transitioned into a governance structure centering on three oversight committees, with independent outside directors installed to monitor compliance.

The automaker faces a tough business climate. Net profit plunged 94.5% on the year for the first quarter ended June 30. Nissan sees the bottom line shrinking nearly 47% to 170 billion yen for the full year ending March 2020.

To cope with the fallout, Nissan has announced that it will shut down production facilities and trim capacity. This will result in job cuts numbering 12,500 positions, or 10% of the global workforce.

Although S&P Global Ratings downgraded Nissan's debt earlier this year, the current A- rating is still investment-grade. The company's equity ratio was at a healthy 28% at the end of June, and liquidity on hand amounted to 1.2 trillion yen.

While structural reforms are costly, Nissan cannot neglect spending on advanced technology to remain competitive. By returning to the bond market, the automaker hopes to have additional funds ready for unexpected expenses.

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