2020 Ain't Looking Bright, According to Moody's

The growing spectre of coronavirus, an illness currently knocking on every country’s door (and waltzing past the threshold of many), has led Moody’s Investor Service to take an axe to global car sales projections.

On Wednesday the firm erased earlier predictions of a mild cool-off in 2020, replacing it with a steeper volume loss. Given recent reports of automakers scrambling to circumvent supply chain disruptions, idling plants, and a near-total drop in new vehicle sales in China, the prediction has legs.

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Junk Food: Ford's Debt Rating Downgraded by Moody's

It should surprise no one that the fortunes of a car company aren’t solely tied to the quality or relevance of the vehicles they produce. Much also hinges on Wall Street’s confidence in the place and, as of now, the money mavens don’t seem to have much conviction in Ford at all.

Moody’s, the investor services company which rates fixed-income debt securities, has downgraded Ford’s credit to junk status. They kicked it out of Baa3 and into Ba1 territory, which is the first rung of junk, a term which simply translates into non-investment speculative grade debt. This preceding phrase causes your author’s mind to spin even more than it does after studying assembly instructions for an IKEA Vittsjö shelving unit.

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Money Matters: Moody's Downgrades Ford to Near Junk

Ford’s been wringing its corporate hands over stock prices for ages. While the market itself is generally rising, the Blue Oval seems to perpetually find itself in Wall Street’s basement. It is arguable that lackluster performance on this front cost Mark Fields his job earlier this year.

Things are not looking up in that department. Yesterday, FoMoCo’s credit rating was cut to Baa3 by Moody’s Investors Service, just a single notch above junk status.

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Moody's: Underwriting Standards, Borrower Credit Declining

The global outlook for Auto Back Securities (ABS) is steady – except in North America, where underwriting standards and borrower credit are slipping.

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Moody's Cuts Fiat's Rating Down Due To Earnings Worries, Outlook
Moody's Upgrades GM Credit Rating To Investment Grade

In another sign that largest American automaker has come back from its 2009 bankruptcy, for the first time since 2005, a credit rating firm has judged General Motors’ corporate debt to be investment-grade. On Tuesday, Moody’s Investors Service raised GM’s rating to Baa3 from Ba1. Baa3 is Moody’s lowest rating that it considers worthy of investment.

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Moody's: Fiat Is Junk. Bad Junk

Today, credit rating agency Moody’s cut the rating on Fiat’s bonds down two notches from Ba1 to Ba3. Merrill Lynch wrote in a letter to customers that it is ”worth remembering that Fiat debt is already junk rated so there will not be a change in the credit investor base for Fiat, but cost of refinancing goes up.”

Officially, bonds in the Ba family are regarded to be of “questionable credit quality”. In the business, “Ba1” is known as junk, B3 as “bad junk”. It is interesting what got Fiat the demerits: Chrysler.

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Moody's Mulls Toyota Downgrade

Not very unexpectedly, ratings agency Moody’s is looking into taking it’s view of Toyota’s long-term debt down a notch. Usually reliable Reuters says that Moody’s “put its credit rating on Toyota Motor Corp on review for a possible downgrade.” For the obvious reasons, namely disruptions to Toyota’s supply chain from the March 11 earthquake and tsunami and subsequent power cuts. Even if bond ratings put you to sleep, you might be interested in Moody’s views on the resumption on normal car production.

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Yabe! Another Shitty Day At Toyota

Yabe! (Oh shoot.) As the sun set over Toyota City and Tokyo, Toyota’s execs and Sararimen (salary men) alike were crying in their sake. Today was a sai aku (very bad) day. A day everybody at Toyota most likely would want to forget. No, no recall for a change. There isn’t much left to recall anyway, or so it seems.

The sai aku day started with Moody’s downgrading Toyota’s formerly stellar credit rating to “its lowest-ever level,” as The Nikkei [sub] laments. Moody’s came to the somewhat belated conclusion that “multi-million vehicle recalls and safety issues raise questions about its profitability and ability to stay ahead of rivals on pricing power until 2012 at the earliest.”

To make matters even more sai aku, Moody’s warned that its outlook for the rating remains negative. Why the pessimism?

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Toyota's '08 Losses 3X Worse Than Thought: $4.95b

Toyota will end their fiscal year ending in March badly bruised. Financial Times reports that ToMoCo’s losses will be three times larger than previously forecast. The worst industry slump in decades has put a painful crimp in an amazing run. Last year, Toyota earned a record operating profit of $30b. In the same year, they became officially the world’s largest automaker, a title many had said should have been given to Toyota a year before. In November 2008, Toyota still projected a profit of $6.6b. Then, carmageddon caught up with them.

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  • ToolGuy I AM PLACING [sic] NICELY. There is NO NEED TO BAN ME. Personally I do lots of things which DON'T MAKE SENSE, sometimes to myself, often to others. WHO ELON MUSK ENDORSES is really kind of NONE OF MY BUSINESS. It is a FREE COUNTRY, in some ways, still. I wish I knew how to FORMAT MY COMMENT better. I USED TO KNOW HOW, maybe I am losing it slowly (lot of that going around, JUST SAYING).
  • Aja8888 I can't read those whole thread without throwing up....
  • ToolGuy Maybe I will GIVE IT A LISTEN. Probably when I'm MOWING THE LAWN. Probably with a BATTERY OPERATED MOWER. (There are also batteries IN MY HEADPHONES. And IN MY PHONE.) Does anyone remember how to make a NEW PARAGRAPH?
  • ToolGuy I am NOT SURE WHAT TO SAY. In fact I'M NOT EVEN SURE WHAT I JUST READ. I paid a premium for my last cordless drill/driver because it has a hydraulic front end which PRODUCES LESS NOISE AND VIBRATION.
  • ToolGuy Tim, THANK YOU FOR THE ALL CAPS. I think it ADDS A LOT to the discussion. I might USE it MYSELF in the future. Have a GREAT WEEKEND.