Moody’s drops Honda outlook to negative

Moody's Japan K.K. said it affirmed Honda Motor Co., Ltd.'s A1 issuer rating and Prime-1 commercial paper rating, as well as its subsidiaries' A1 senior unsecured and Prime-1 ratings.

The outlook was changed to negative from stable.

The outlook change follows the company's announcement of its results for the fiscal year ended March 2016 and its forecasts for fiscal year ended March 2017.

Moody's noted that Honda's profit declined in fiscal year ended March 2016, due largely to provision expenses related to recalls of airbag inflators manufactured by Takata Corp. (unrated).

The negative outlook is driven by the agency’s expectation that the company's cash flow will be pressured over the next few years from delayed payouts for the repair costs related to the recalls, Moodys’ said.

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