Credit bureau S&P Global Ratings has downgraded Nissan’s credit rating to a junk rating. The cut is a blow to the Japanese automaker, which has struggled to increase profitability since the arrest of former chairman Carlos Ghosn. However, S&P Global thinks a strong recovery in Nissan profits and sales is “unlikely”.
The credit bureau expects Nissan’s profitability to lag that of its peers for the next one to two years. The rating agency believes supply chain problems will persist, delaying a recovery in sales in the United States and Europe and putting pressure on automakers to lower prices.
A junk rating means Nissan has to pay higher fees to sell foreign currency bonds abroad. The outlook for the Japanese automaker is stable, according to S&P, because profitability is gradually improving and the company is conservative in its financial planning. If Nissan succeeds in significantly increasing sales over the next 12 to 18 months, S&P is considering raising Nissan’s credit rating.
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