Moody's may lower Nissan Motor Acceptance

Moody's Investors Service said it placed the A2 senior unsecured and P-1 commercial-paper ratings of Nissan Motor Acceptance Corp. on review for downgrade.

The review follows news that Nissan Motor's parent, Nissan Motor Co., Ltd., also was placed on downgrade review.

Nissan has revised down its forecast for the current fiscal year that ends March 31, 2019, Moody's said.

Nissan estimates that its consolidated operating margin will decline to 3.9% for fiscal 2018, worse than its previous estimate of 4.5%, the agency said.

The main driver of Nissan's downward forecast revision is the high level of sales incentives in the United States and the decline in unit sales, especially in North America, Moody's said.

Nissan is revising its North American sales strategy to de-emphasize unit sales growth and reduce sales incentives, the agency said.

If successful, these measures would restore profitability, but it does entail execution risk, Moody's said.

Nissan also faces challenges in improving its corporate governance against the backdrop of alleged managerial misconduct involving its former Chairman Carlos Ghosn, the agency said.

The removal of this executive has cast uncertainty as to the future of the interlocking ownership structure and synergistic alliance with Renault SA, Moody's said, as well as Mitsubishi Motors Corp.

The ratings also reflect the company's position as Nissan's finance captive in the United States market, the agency added.

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