Tag: senior

Rating Action: Moody’s affirms at Baa3 Nissan Motor Acceptance’s long-term senior unsecured ratings; changes outlook to stable from negativeGlobal Credit Research – 13 Dec 2021New York, December 13, 2021 — Moody’s Investors Service (“Moody’s”) has affirmed all the ratings for Nissan Motor Acceptance Company LLC (NMAC), including its Baa3 long-term senior unsecured ratings and its Prime-3 backed commercial paper rating. NMAC’s outlook was changed to stable from negative.The rating actions follow similar actions on the ratings for NMAC’s ultimate parent, Nissan Motor Co., Ltd. (Nissan, Baa3 stable), whose ratings were also affirmed with outlook changed to stable from negative.Affirmations:..Issuer: Nissan Motor Acceptance Company LLC….Backed Commercial Paper, Affirmed P-3….Backed Senior Unsecured Medium-Term Note Program, Affirmed (P)Baa3….Backed Senior Unsecured Regular Bond/Debenture, Affirmed Baa3….Senior Unsecured Regular Bond/Debenture, Affirmed Baa3Outlook Actions:..Issuer: Nissan Motor Acceptance Company LLC….Outlook, Changed To Stable From NegativeRATINGS RATIONALEThe ratings for NMAC reflect both its intrinsic credit quality (ba1 standalone assessment) and uplift derived from support from Nissan. NMAC’s Baa3 long-term ratings are aligned with Nissan’s Baa3 ratings, based on NMAC’s strategic significance to Nissan, Moody’s expectation that Nissan would support NMAC if required, as well as the explicit support agreement in place between the two companies.Moody’s said NMAC’s ba1 standalone assessment reflects its good capitalization that protects creditors against unexpected losses and strong liquidity. Similar to its peers, the company continues to be extremely profitable, and NMAC’s tangible equity to tangible assets remains strong (15.6{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} at 30 September 2021), despite it having made a sizeable $1.3 billion parental distribution in June 2021.Moody’s said that NMAC is the only firm among rated US auto captive companies that has an agreement with its parent wherein the parent provides an indemnification from losses associated with the lease portfolio (39{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} of managed assets at 30 September 2021), making NMAC comparatively less vulnerable to variations in used car prices. Moody’s expects the extraordinary used car price appreciation that has occurred during the coronavirus pandemic to moderate by the end of 2022. Through October 2021, used car prices increased 45{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} from 2020 levels.NMAC’s managed receivables ($38.2 billion at 30 September 2021) have declined by approximately 10{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} since last year. Moody’s expects, however, that the company’s receivables will be supported by better new vehicle sales at Nissan. Since the beginning of this year through 30 September 2021, Nissan saw an increase in sales in the US by approximately 19{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}. This compares to a decline of about 33{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} in 2020. The anticipated growth in retail portfolio may be slightly offset by declining dealer financings and uncertainty around consistency of new vehicle sales growth due to the semiconductor shortage and supply chain disruptions expected to continue partially through 2022. Other credit challenges for NMAC include its significant use of securitization that reduces the company’s ability to access alternative sources of liquidity, said Moody’s.FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGSNMAC’s ratings could be upgraded if the ratings for its parent Nissan are upgraded. An upward adjustment of NMAC’s standalone assessment is unlikely given its reliance on one car manufacturer for revenue and assets and its dependency on market funding.NMAC’s ratings could be downgraded following a downgrade of the ratings for its parent Nissan. A downward adjustment of NMAC’s standalone assessment could occur should there be a sustained material decline in asset quality and profitability, diminished liquidity, or leverage (TCE/TMA) reducing to less than 12{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}. However, a downward adjustment of NMAC’s standalone assessment without a change in Moody’s assessment of Nissan’s willingness and ability to support NMAC would likely not affect NMAC’s ratings.Headquartered in Franklin, Tennessee, Nissan Motor Acceptance Company LLC is a wholly owned subsidiary of Nissan North America, Inc., which is a wholly owned subsidiary of Nissan Motor Co., Ltd (Nissan). As of 30 September 2021, NMAC had approximately a $38 billion portfolio of finance receivables and operating leases.The methodologies used in these ratings were Finance Companies Methodology published in November 2019 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1187099, and Captive Finance Subsidiaries of Nonfinancial Corporations published in August 2019 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1183459. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of these methodologies. 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Further information on the EU endorsement status and on the Moody’s office that issued the credit rating is available on www.moodys.com.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody’s affiliates outside the UK and is endorsed by Moody’s Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody’s office that issued the credit rating is available on www.moodys.com.Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody’s legal entity that has issued the rating.Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating. Inna Bodeck Vice President – Senior Analyst Financial Institutions Group Moody’s Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. 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