Nissan Motor is planning a big financial move. The Japanese car company wants to raise $4 billion by selling bonds in dollars and euros. A term sheet seen by Reuters on Monday revealed the details.
This comes just a week after news broke that Nissan asked some suppliers to delay payments. It clearly shows the company is low on short-term cash. Now, it’s trying to find quick money by selling senior unsecured bonds.
Nissan Motor plans to sell five-, seven-, and ten-year bonds in U.S. dollars. Each group of bonds aims to raise at least $750 million. For investors, Nissan has offered interest rates in the mid-7% for five-year bonds, high-7% for seven-year bonds, and low-8% for ten-year bonds.
It is also planning euro bonds. These will be four- and eight-year terms. Each will raise a minimum of 500 million euros, which is about $588 million. The euro bonds will offer high-5% interest for the four-year one and high-6% for the eight-year one.
On top of all this, Nissan Motor will also issue a 150 billion yen (around $1 billion) six-year convertible bond.
All the money raised will go to refinancing existing debt. This means Nissan wants to replace old loans with new ones—possibly at better terms, or just to delay payments.
Last year, the company raised $300 million through a five-year dollar bond at 5.55% interest. But the same kind of bond today is trading at a much higher rate. A five-year bond Nissan sold in 2021 at just 2% is now trading at over 6%, showing how much tougher things have become.
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Debt, losses, and downgrades
Nissan is not in a good place right now. It reported a $4.5 billion net loss for the year ending in March. The company hasn’t given any forecast for the next year either.
It also has to repay about 700 billion yen in debt this financial year. All three top credit-rating firms have now rated Nissan Motor’s debt as “junk.”
Fitch Ratings said that Nissan is weaker than rivals like General Motors, Ford, and Stellantis. It pointed to low profit margins and weak cash flow. But Fitch also said Nissan’s low overall debt and cash position are still better than some higher-rated companies.
New boss, new plan
To fix things, new CEO Ivan Espinosa has announced a major restructuring plan. This includes closing 7 of 17 plants and cutting about 15% of the global workforce.
Still, if Nissan gets downgraded again, raising money in the future will get harder and more expensive. That risk was clearly noted in a June filing by the company.
For now, Nissan Motor is trying to survive and rebuild. But its bond sale looks more like a lifeline than a growth plan.
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