KUALA LUMPUR: Moody's Japan K.K.'' downgraded Toyota Motor Corporation and its supported subsidiaries' senior unsecured long-term ratings to Aa3 from Aa2.
Moody's said on Tuesday, June 28 the ratings also remain on review for possible further downgrade.
'The downgrade reflects Moody's concern that it would take some time for Toyota to recover its previous strong profitability, and its competitive strength will remain under pressure for a prolonged period in view of challenging market conditions,' it said.
The ratings on the following entities affected were Toyota Motor Corp, Toyota Financial Services Corp, Toyota Finance Australia Ltd, Toyota Credit Canada Inc, Toyota Motor Finance (Netherlands) B.V., Toyota Finance Corporation, Toyota Finance New Zealand Ltd and Toyota Financial Services (S. Africa) (Pty).
Moody's added it would also continues its review of Toyota's ratings for possible further downgrade because its final ratings incorporate one notch of support from the country's banks and government, which are themselves under review for possible downgrade.
'If these bank and sovereign ratings are downgraded, Japan's support system for corporates would be negatively impacted,' it said.
The ratings agency said at the same time, the Aa3 ratings incorporate the faster-than-expected recovery in Toyota's production levels following supply chain disruptions and power shortages because of the March 11 earthquake.
Moody's believed Toyota's strong ability to reduce its cost base will continue to mitigate to some extent the negative market environment.
Moody's said on Tuesday, June 28 the ratings also remain on review for possible further downgrade.
'The downgrade reflects Moody's concern that it would take some time for Toyota to recover its previous strong profitability, and its competitive strength will remain under pressure for a prolonged period in view of challenging market conditions,' it said.
The ratings on the following entities affected were Toyota Motor Corp, Toyota Financial Services Corp, Toyota Finance Australia Ltd, Toyota Credit Canada Inc, Toyota Motor Finance (Netherlands) B.V., Toyota Finance Corporation, Toyota Finance New Zealand Ltd and Toyota Financial Services (S. Africa) (Pty).
Moody's added it would also continues its review of Toyota's ratings for possible further downgrade because its final ratings incorporate one notch of support from the country's banks and government, which are themselves under review for possible downgrade.
'If these bank and sovereign ratings are downgraded, Japan's support system for corporates would be negatively impacted,' it said.
The ratings agency said at the same time, the Aa3 ratings incorporate the faster-than-expected recovery in Toyota's production levels following supply chain disruptions and power shortages because of the March 11 earthquake.
Moody's believed Toyota's strong ability to reduce its cost base will continue to mitigate to some extent the negative market environment.
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