Nissan is facing unprecedented levels of debt as it heads into 2025, as the automaker will owe around $1.6 billion next year. That number could climb as high as $5.6 billion in 2026, the highest amount recorded by Bloomberg dating back to 1996.
Kentaro Harada, the chief credit analyst at SMBC Nikko Securities, said, “Under current conditions, Nissan may become a fallen angel, and when markets are aware of such a downgrade risk, investors may require spreads pricing in such risks.
Despite the challenges ahead, Nissan is relatively well positioned from a liquidity standpoint, holding more than $8.3 billion in cash. It has also arranged credit with international banks to fund its automotive businesses. That said, the automaker’s credit rating is hovering somewhere between decent junk bond status and the lowest scores possible, depending on the ratings entity.
Though it currently has some cash reserves, Nissan’s product line is anything but current. It also saw a deficit in its automotive businesses, which could drain its coffers as it looks to develop new EVs and other vehicle technologies.
The upcoming Trump administration could add to Nissan’s challenges. The company manufactures vehicles in Mexico, and a move to add tariffs to imports from the country could put the automaker in a tough spot. The entire industry is staring down the same issues, however, so Nissan won’t be alone.
[Images: Nissan]
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Source: The Truth About Cars
