According to foreign media reports, on July 7, Nissan Motor Co. announced plans to issue 150 billion yen (about $1.04 billion) of convertible bonds to fund the turnaround of the troubled car company by new CEO Ivan Espinosa.
Image source: Nissan Motor
The Japanese automaker said in a statement that the funds raised will be used to invest in new products and technologies, including in the field of electrification and software-defined vehicles.
After the announcement of Nissan’s plan to issue convertible bonds, Nissan’s stock price fell by the most in nearly three months. In early trading on July 7, its stock price fell 5.2% in early trading, narrowing to about 3% as of 1:04 p.m. local time. Over the past 12 months, the company’s stock price has fallen by about 40%.
In addition, a fundraising prospectus reviewed by Reuters on July 7 showed that Nissan plans to issue $4 billion in senior unsecured bonds denominated in dollars and euros.
According to the prospectus, Nissan plans to issue 5-year, 7-year and 10-year US dollar bonds, with a minimum fundraising amount of US$750 million per bond. Nissan has told potential investors that the coupon rate on the 5-year bond is about 7.5%, the 7-year is about 7.8%, and the 10-year is about 8.1%.
In addition, Nissan also plans to issue 4-year and 8-year euro bonds, with a minimum fundraising size of 500 million euros (about $588.4 million) each. According to the prospectus, the 4-year bond interest rate pricing guidance is about 5.8% and the 8-year is about 6.8%.
The plan came a week after Reuters reported that Nissan had asked some suppliers to allow it to delay payments to free up short-term funds, highlighting the recent cash flow pressure faced by Nissan.
Nissan has about 700 billion yen of debt due this fiscal year, and all three major credit rating agencies have downgraded its debt rating to “junk level”.
Bloomberg reported in May that Nissan is facing huge loan repayment pressure next year and is seeking to raise more than 1 trillion yen through debt financing and asset sales to keep the business running. Last year, Nissan issued $300 million in five-year U.S. dollar bonds with an interest rate of 5.55%.
However, Espinosa said in an interview with Bloomberg TV in May this year that Nissan currently holds about 2.2 trillion yen in cash and credit lines, and the capital reserves are enough to support operations for the next 12 to 18 months.
Affected by declining sales and aging models, Nissan suffered a net loss of $4.5 billion in the fiscal year ending March this year and did not disclose its performance forecast for the fiscal year ending March 2026. The new CEO, Espinosa, has announced that it will lay off 20,000 employees and close seven of its 17 factories around the world by the end of March 2028. Merger talks between Nissan and Honda broke down earlier this year, in part because of whether the two sides should cut further at NissanCapacityand personnel.