Toyota has had its credit ratings cut for the first time in a decade, hitting its shares and raising borrowing costs.
Fitch Ratings on Wednesday downgraded Toyota’s long-term foreign and local debt ratings to AA from AAA, with a negative outlook, saying the company needed to review its global investments, product mix and speed of expansion to address the challenges it faces.
Fitch also cited high material costs as another challenge Toyota would be facing.
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“Toyota is suffering severely from the ongoing turmoil in the global automotive sector,” said Tatsuya Mizuno, a Fitch director.
The simultaneous slowdown in the major auto markets and the appreciation of the yen, which erodes the overseas earnings of Japanese exporters, were among the “multiple negative developments” battering Toyota’s earnings, he said.
“The negative developments in the industry are so substantial and fundamental that even the strongest player — Toyota — can no longer support an ‘AAA’ rating,” he said.
