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Nissan awarded massive loan guarantee by Japanese government

To support the automaker during these trying times

The financial lifeboat thrown by the Japanese state should hopefully keep Nissan afloat. PHOTO FROM NISSAN

The global pandemic has created a very rough ocean for the automotive industry to sail through. Nissan, which already had financial struggles and a corporate fiasco pre-pandemic, has been rocked even more by the health crisis in the past months.

With a stroke of luck, the Japanese government along with the Development Bank of Japan (DBJ) have come to Nissan’s rescue. A sizable crisis loan sum of ¥180 billion ($1.7 billion) has been awarded to the automaker last May–80% of which is guaranteed to be shouldered by the Japanese government if the carmaker defaults on it.

So far, this is the biggest loan guarantee granted to a large corporate entity by the government in the Land of the Rising Sun. The loan amount was based on the scale of the company’s business and the overall national impact of the novel coronavirus. The support comes as part of Japan’s emergency response to the economic onslaught of the pandemic.

This is the biggest loan guarantee granted by the Japanese government to a large corporation

The Japanese government since March enacted a coronavirus crisis support plan in which the state-backed DBJ has awarded a total of 185 loans to different companies and has dispersed a total of ¥1.88 trillion ($17.7 billion) at the close of July. From both private and public sectors, Nissan has already accumulated a total loan amount of ¥832.6 billion ($7.84 billion) since April.

A damage protection arrangement was agreed upon by the government and DBJ, wherein the financial institution covers a guarantee involving an annual premium of anywhere from 0.01 to 1% of the loan sum. The carmaker was the only loan recipient that prescribed such a guarantee.

The Japanese government’s support for businesses in a time of great crisis is nothing short of commendable. We wish we could sincerely say the same for our own government. With still no clear end in sight for the global pandemic, only time will tell if the financial support received by Nissan be enough to keep this great car company afloat with all the uncertainties ahead.

Manskee Nascimento

Manskee is a music-loving petrolhead who specializes in car care. He finds peace in long drives to and from his home in La Union.