Moody's may downgrade Toyota credit rating


Moody's Investors Service said this week it might downgrade Toyota Motor Corp.’s credit rating as it waits to see how the automaker responds to suspended production after the Japanese earthquake and tsunami.

According to The Associated Press, Toyota is currently running two plants at limited capacity in Japan after halting production at all 18 factories in Japan from March 14
 to 26.

The automaker said it would resume limited production at another plant west of Tokyo this week, though a spokesperson did admit to the news agency it remains unclear when the auto giant will return to full production in Japan.

Sources close to the matter have said the double disasters to hit the Japanese coast on Mar. 11 have cost the automaker a production loss of roughly 260,000 units.

The news agency reports that concern around the production capacity has forced the company’s share down nearly 10 per cent since the disaster.

Mamoru Kato, an analyst at Tokai-Tokyo Securities, told The Associated Press that Toyota's two open facilities account for just 3 to 4 per cent of normal capacity.

“There is no question that a plunge in domestic production will really hurt Toyota's earnings,” Kato told the news agency. “We don't know how long the shortage crisis will last.”

Moody’s said it has set Toyota’s long-term, uncollateralized debt rating is at Aa2.

“Moody's will also consider how quickly the company can improve its profitability despite the negative impact of the disasters,” it said.

- With files from The Associated Press