Moody's Japan K.K. of
) allotted A1 ratings to the USD Medium Term Notes Program,
Series A that were issued by
Honda Motor Co.
) wholly-owned subsidiary American Honda Finance Corporation
(AHFC). The rating agency has a stable outlook for the same.
The notes, included in the ratings are $1 billion USD MTN
Program, Series A notes due in 2016, $750 million USD MTN
Program, Series A floating notes due in 2016, and $1 billion USD
MTN Program, Series A notes due in 2018.
The rating agency has assigned the A1 rating based on the
automaker's admirable brand image together with the strong market
position that Honda commands in its core automotive business. In
addition, the strong position in the motorcycle business, cost
efficiency and a sturdy balance sheet also influenced the rating.
Moody's assigned a stable outlook on the rating based on enhanced
operating performance by Honda. The agency believes that its
improved performance will continue in the future too.
The "Keep Well Agreement" between Honda and AHFC has improved the
credit quality. Under this agreement, Honda needs to possess a
minimum of 80% of AHFC's equity, either directly or indirectly.
Meanwhile, AHFC should have positive tangible net assets and
Moody's believes that AHFC plays an important role in Honda's
U.S. auto business as it provides auto loans and leases for
Honda's cars in the U.S.
Honda posted a 5.8% rise in earnings to ¥75.8 billion ($805
million) or ¥42.03 (45 cents) per share in the fourth quarter of
the fiscal year ended Mar 31, 2013 from ¥71.6 billion or ¥39.72
in the same quarter of the prior fiscal year. However, earnings
lagged the Zacks Consensus Estimate by 18 cents during the
Consolidated net sales and other operating revenues grew 14.1% to
¥2.7 trillion ($29.2 billion). The increase was attributable to
improved revenues in automobile business operations as production
recovered from the impact of Thai flood as well as favorable
foreign currency translation effects.
Currently, Honda retains a Zacks Rank #2 (Buy). In the same
Fuji Heavy Industries Ltd.
), each caring a Zacks Rank #1 (Strong Buy) are worth a
look at the moment.
DAIMLER AG (DDAIF): Get Free Report
FUJI HEAVY ADR (FUJHY): Get Free Report
HONDA MOTOR (HMC): Free Stock Analysis Report
MOODYS CORP (MCO): Free Stock Analysis Report
To read this article on Zacks.com click here.