Mazda shut out of bond market - now seeks Japanese Government Bailout.

[AMERICA 123]

Mazda to Seek Japan’s Aid After Being Shut Out of Bond Market

By Naoko Fujimura and Tetsuya Komatsu

March 17 (Bloomberg) -- Mazda Motor Corp., burdened with the second-worst credit rating among Japan’s carmakers and a 62 percent surge in short-term borrowing this fiscal year, plans to apply for government aid as it consumes cash.

“We can’t sell bonds right now,” said Nobuyoshi Tochio, general manager of Mazda’s financial services division. “The market isn’t functioning. Conditions are really bad.”

Mazda, Japan’s second-largest car exporter, used 174 billion yen ($1.8 billion) in cash last quarter as sales of Mazda6 sedans have plunged in the U.S. and Europe.

The Hiroshima-based company may turn to the government for low- interest loans as its junk rating prevents it from following Toyota Motor Corp. in tapping capital markets. < wrong - nobody can afford the offered interest rates >

“Mazda needs loans from the government badly, as it’s vulnerable,” said Koichi Ogawa, chief portfolio manager, at Daiwa SB Investments Ltd. in Tokyo, which manages $28 billion.

“The company is important to the local economy, so it should be able to get them.”

Mazda’s short-term borrowings including leases, loans and bonds due this year surged to 221 billion yen in the nine months ended December, exceeding the company’s untapped 200 billion yen credit line.

The carmaker expects a 13 billion yen loss for the year ending this month and analysts forecast the loss will almost triple to 37.5 billion yen next fiscal year.

The company may apply < like all the others > to the Japan Bank for International Cooperation and Development Bank of Japan, both government-owned, for < effectively almost 0% interest > - loans to bolster its cash position, Mazda’s Tochio said in an interview on March 13 in Tokyo. -


To contact the reporter on this story: Naoko Fujimura in Tokyo at nfujimura@bloomberg.net; Tetsuya Komatsu in Tokyo at tekomatsu@bloomberg.net
Last Updated: March 17, 2009 04:47 EDT

More at the link.


http://www.bloomberg.com/apps/news?p...i8U&refer=home

[wescoent]

Last year, Ford owned a controlling stake in Mazda.

They sold some of this stake, ceding control, but getting some cash for the equity.

Now, that Ford is no longer responsible for Mazda, Mazda can seek Japanese government loans as an effective independent, and Ford doesn't need to use any of its money to help Mazda.

Gee, it's ALMOST like it was planned that way.

[Stéphane Dumas]

Gee, it's ALMOST like it was planned that way.

Or another possibility, Mullaly might discovered then despite new Mazda 3 & 6 as well as the European Mazda 2, there some turbulent times ahead on Mazda's path.

Note then Ford still have a smaller stake in Mazda, around 13%

[1931Chevy]

Considering that FoMoCo had access to Mazda books they in a way know that Mazda its in for a tought time so right now everybody its on survival mode and eveybody for themselves

[Aprime]

Last year, Ford owned a controlling stake in Mazda.

They sold some of this stake, ceding control, but getting some cash for the equity.

Now, that Ford is no longer responsible for Mazda, Mazda can seek Japanese government loans as an effective independent, and Ford doesn't need to use any of its money to help Mazda.

The way they split the whole thing still gives them control over the company.

They just can't put it in their business stuff (website & all) officially.

[jkennedy293]

Welcome to the club, Mazda.

[Kennyboy]

The worst car market in Japan and the tight credit squeeze are starting to take a toll on automakers.

[Hunid Racks]

You would think that with so many economies reducing prime rates to such low levels that credit would be easy. That lending would be a snap.

Guess again.

When the margins are so small, why lend? Banks horde now and it makes sense. They are all crossing their fingers figuring these low rates will go away and they won't be the ones stuck with low interest loans.

[jbernie]

“Mazda needs loans from the government badly, as it’s vulnerable,” said Koichi Ogawa, chief portfolio manager, at Daiwa SB Investments Ltd. in Tokyo, which manages $28 billion.

“The company is important to the local economy, so it should be able to get them.”

Funny, the response in the USA is "f**K you go fail we couldn't care less" well at least if you are an automaker named General Motors, but if you are financial company it seems to be more "hard times? need some loving? sure you have all the billions you need, don't forget to call me!"

[63GrandSport001]

It doesn't take a rocket scientist to figure that in this time a automaker is going to be in rough time, Im going to bet that all of the bigger automakers are going to be in hot hotter and almost all of those are going to need a bailout (if not all).

[Extreme4x4]

You would think that with so many economies reducing prime rates to such low levels that credit would be easy. That lending would be a snap.

Guess again.

When the margins are so small, why lend? Banks horde now and it makes sense. They are all crossing their fingers figuring these low rates will go away and they won't be the ones stuck with low interest loans.

Actually, the margins today are higher than they were a couple of years ago. Remember that the government is basically giving the money to the banks, to lend (0-.5%)............ yet, the interest rates, really are no lower than they were a couple of years ago.

They are factoring in higher risk, yet they are only willing to lend to the customers who have basically no risk involved (680++ FICO scores).

Lending has always cycled, but this is very extreme. However, I guess the low is balancing out the high. When you go from "anyone with a pulse" can get a loan, to "only the most golden of the gold" can get a loan............ you will eventually balance out somewhere in the middle. It will just take time.

[westtxsky]

Funny, the response in the USA is "f**K you go fail we couldn't care less" well at least if you are an automaker named General Motors, but if you are financial company it seems to be more "hard times? need some loving? sure you have all the billions you need, don't forget to call me!"

Mazda should cease to exist. A lot of auto companies need to go out of business so the remaining can be profitable.

[Stéphane Dumas]

Mazda should cease to exist. A lot of auto companies need to go out of business so the remaining can be profitable.

nah, it should Honda instead, they had once fun cars to drive but they had lost their "zoom-zoom" attitude to morph into "grand'pa car territory"

on a more serious note, maybe Mazda might probably merge with another Japanese carmaker.

[delmarjohn]

zoom zoom....I might be wrong ..BUT ..i don't believe ford ever had controlling interest in mazda...I don't believe that is allowed by the great empire of the rising sun....last i heard was they owned 40 %.....but like I said I could be misinformed....

[delmarjohn]

nah, it should Honda instead, they had once fun cars to drive but they had lost their "zoom-zoom" attitude to morph into "grand'pa car territory"

on a more serious note, maybe Mazda might probably merge with another Japanese carmaker.

they do that so they sell to people with purchasing power ...you can have exciting cars but as always there is a disconnect from wanting and needinf ...and affording and practicality