The bad news train does not stop at carmaker Nissan (NSANY). The merger with Honda (HMC) fell through, it started throwing out employees, and now, Moody’s is taking aim at the company’s bond rating. But some good news has emerged, and investors are clinging to the hope of rescue as shares surged over 5.5% in Friday afternoon’s trading.
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Moody’s cut Nissan’s senior unsecured debt, reports note, from Ba1 to Baa3, which is “the lowest investment grade” rating the company has. Moody’s also kept a negative rating outlook overall, leaving Nissan’s debt rating at junk status, reports noted.
The biggest problem Nissan has right now, Moody’s analysts noted, was just turning its business around. Its model portfolio is regarded as out of touch and aging poorly, its profitability is best described as “weak,” and its ability to succeed in the United States market is on the downtrend as well. While Nissan has been working on restructuring plans, these are not going well overall, which may leave Nissan on the back foot going forward.
A C-Level Human Sacrifice
While some are looking for hope from Tesla (TSLA), there is also hope that Honda will come back to the table. But not without even more concessions than it was originally considering. Reports note that Honda is willing to get back in on negotiations for a merger with Nissan, but will require Nissan’s CEO be shown the door first.
The worst part here is that Honda established that as a condition for even returning for talks, rather than a condition of successful talks. This might mean that Nissan would be down a CEO without any kind of commitment on Honda’s part, suggesting that, indeed, Nissan was regarded as the “junior partner” all along that some feared would be the case.
Is Nissan Stock a Buy or Sell?
Turning to Wall Street, no analysts currently carry a rating on NSANY, so we turn to the last five days of trading instead. Thanks mostly to today’s movement, shares are up 2.43% over the interval. Shares were flat in the early going, but took two small down steps before rallying to significant gains with Friday afternoon’s trading figures.
