S&P puts Mitsubishi Motors on watch

S&P said it placed its BB+ long-term issuer credit rating on Mitsubishi Motors Corp. on CreditWatch with negative implications. The CreditWatch placement reflects the view the company's EBITDA margin will face considerable pressure due to the rapid deterioration of business conditions caused by the coronavirus pandemic.

“We believe the company's EBITDA margin could decline further, reaching a level that is not commensurate with the rating, given the expected very weak car sales in key markets, possible disruption to global supply chains and the risk of volatile foreign exchange rates,” said S&P in a press release.

S&P said it expects Mitsubishi Motors' EBITDA margin (excluding its captive finance operations) to drop to below 5% in fiscal 2019 (ending March 31, 2020), from 6.8% in fiscal 2018 and estimates it could further decline.

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