(Press release provided by Moody's Investors Service)
TOKYO, May 19 - Moody's Investors Service has confirmed its Prime-1 rating forFinance Co Ltd (Honda Finance) with the proposed rise in its commercial paper program to 200 billion yen ($1.73 billion) from 150 billion yen.
Moody's rating is based on a Keepwell Agreement fromMotor Co Ltd (Honda), whose long-term rating is A1. Under the agreement, Honda will maintain 100 percent ownership of Honda Finance as well as ensure Honda Finance has a tangible net worth of at least 10 million yen and sufficient liquidity to repay borrowings under this CP program.
The rating recognizes Honda Finance's importance to Honda's overall auto financing strategy.
The rating also considers Honda's established business position in key global auto/motorcycle markets, its strong R&D and new product development capabilities, its highly efficient production systems and its prudent financial strategy.
Honda Finance provides retail sales and lease financing for Honda products sold in the Japanese market. Sales financing is becoming increasingly important in Japan as a marketing tool for auto manufacturers.
Honda's medium-term plan is to raise domestic unit sales by introducing new models and enhancing auto financing activities through Honda Finance. Honda Finance Co Ltd, headquartered in Tokyo, is a wholly-owned finance company of Honda Motor Co Ltd. Honda Motor Co Ltd, also headquartered in Tokyo, is one of the world's leading automobile manufacturers and the largest motorcycle manufacturer. ($1=115.62 yen)