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Finance

Nissan to issue $8bn in US-dollar corporate bonds

Automaker to bolster cash reserves in face of costly reforms and pandemic

The move marks the first time Nissan has issued dollar-denominated bonds since it joined with French automaker Renault in 1999. (Photo by Kosuke Imamura) 

TOKYO -- Nissan Motor will issue $8 billion in U.S. dollar-denominated corporate bonds to offset expected sluggish sales due to the pandemic, hoping to shore up cash reserves to help weather the crisis.

Nissan issued domestic corporate bonds in July for the first time in four years. Due to the company's low rating, the amount issued was only 70 billion yen, prompting the company to look overseas where there are fewer risk-averse investors.

The Japanese automaker is also preparing to issue euro-denominated bonds.

This is the first time Nissan has issued dollar-denominated bonds since it formed an alliance with French carmaker Renault in 1999.

Nissan plans to issue $1.5 billion each for three- and five-year terms and $2.5 billion each for seven- and 10-year terms on September 17. The yield will be 3.04% for the three-year bond and 4.81% for the 10-year bond.

S&P Global Ratings has marked the new bonds at BBB-, while Moody's Japan has given them Baa3, their equivalent to S&P's BBB-.

The automaker is undergoing structural reforms after performance plunged as a result of its past expansion strategy. The reform costs and impact from the coronavirus have been a huge drag, with the company facing a consolidated loss of 670 billion yen for fiscal 2021.

Nissan raised about 900 billion yen in loans and other funds between April and July. It also took out 180 billion yen in loans from the Development Bank of Japan, of which 130 billion yen is guaranteed by the government.

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