Nobody’s Safe: Toyota Credit Rating Slashed

Bloomberg reports that Fitch has cut Toyota’s credit rating amid a tanking US new car market, the first such cut for Toyota in ten years. Toyota was cut from AAA to AA, with a negative outlook; still comfortably above the sub-junk ratings of some automakers. However, the increased borrowing costs associated with a cut credit rating could bring an end to Toyota’s zero-percent financing incentive program. But according to Fitch, this rating cut is simply a sign of the times, rather than eing based on some specific Toyota wrongdoing. “The negative developments in the industry are so substantial and fundamental that even the strongest player — Toyota — can no longer support a `AAA’ rating,” according to Fitch director Tatsuya Miyuno. For some analysts, Toyota’s position is strong enough to weather the storm. “Toyota’s financial foundation is solid, and I don’t think there has been such a drastic change to warrant a two-level downgrade,” says Yasuhiro Matsumoto of Shinsei Securities. “I don’t see an impact on the company’s new bond issues.” The rating cut leaves only five companies left with an AAA rating from Fitch: Exxon Mobil Corp. and Johnson & Johnson in the U.S. and Regie Autonome des Transports Parisiens, Reseau Ferre de France and Societe Nationale des Chemins de Fer Francais in France.