Rating agency Fitch has downgraded Toyota's long-term debt to “A” due to its heavy exposure to the yen. According to the agency, the Japanese automaker is more exposed to the performance of the Japanese currency than other players, due to its strong component of domestic production.
In addition, earnings performance has been slower compared to other competitors, even taking into account the impact of the recall of thousands of models from distribution in the last two years. The yen climbed to its highest against the US dollar in recent weeks and hit a ten-year high against the euro on Monday, at a time when investors are fleeing to the Japanese currency out of fear of further slowdowns in the US and Europe. A strong yen erodes the profits of Japanese exporters and makes production more expensive at home. The downgrading is more bad news for Toyota, which is slowly recovering from the March 11 earthquake and tsunami that destroyed the distribution chain and led to the temporary closure of production facilities.
http://www.japantoday.com/category/business/view/fitch-downgrades-toyota-one-notch-to-a
