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Toyota Takes Hit as Debt Downgraded

Moody’s makes note of maker’s mounting problems, challenges.

by on Jun.29, 2011

Another setback for Toyota CEO Akio Toyoda.

Not long ago seen as the auto industry’s invincible 800-pound gorilla, the problems keep piling up for Toyota, and that’s worrying the folks who have to put a rating on the maker’s debt – Moody’s downgrading Toyota and warning it could cut the debt rating again in the months ahead.

The Japanese giant still commands the investment-grade rating its Detroit rivals can only dream of, but the latest move by the powerful ratings service underscores growing concerns about Toyota’s ability to cope with problems ranging from quality to new competitors, as well as the setbacks it has suffered in the wake of the March 11 disaster in Japan that will likely reduce its production this year by close to 500,000 vehicles.

It will “take some time,” a statement from Moody’s Investor Services said, for Toyota to “recover its previous strong profitability.”

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As a result, the agency lowered from Aa2 to Aa3 – which is still its fourth-highest credit ranking.  But it follows a downgrade earlier this year by Standard and Poors, and Moody’s warned that yet another downgrade could come soon because Toyota’s ratings “incorporate one notch of support from the country’s banks and government, which are themselves under review for possible downgrade.”

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Toyota Faces Ratings Downgrade

Moody’s eyes impact of March 11 disaster.

by on Apr.06, 2011

Work at Toyota plants worldwide has been impacted by the March 11 disaster in Japan.

Already slammed by the March 11th natural disaster that has left it struggling to resume normal production, Toyota may soon be hit with a ratings downgrade by Moody’s Investors Service.

Such a move could add to the maker’s costs at a time when it is struggling under the loss of hundreds of thousands of units of production.  Even before last month’s earthquake and tsunami – and the subsequent Japanese nuclear crisis – senior Toyota officials were warning that they’d need to take aggressive steps to cut costs and boost profits.

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Saying it will take “many months” to get the company’s operations back to normal, Moody’s issued a warning that it is giving serious consideration to a downgrade of the maker’s debt, which currently stands at Aa2, an investment grade that Detroit’s makers can only dream of achieving.

The ratings firm did note that it, “will also consider how quickly the company can improve its profitability despite the negative impact of the disasters.”

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