Honda explores euro bond sales of over $2.5 billion to pay parts makers, Nikkei reports

June 29 : Honda Motor is exploring issuing euro-denominated bonds expected to total over 400 billion yen ($2.47 billion) to fund payments to auto parts makers, the Nikkei newspaper reported on Monday.

The report said the automaker is likely to use the funds to compensate parts makers after revising its electric vehicle strategy, as well as for investments in hybrid vehicles.

Honda last month posted its first annual loss in seven decades, hurt by more than $9 billion in restructuring costs for its EV business and competition from Chinese rivals. It also scrapped its goal of having EVs make up a fifth of its new car sales by 2030 as well as a target of a full shift to electric or fuel-cell vehicle sales by 2040.

The company is considering floating three bonds with maturities of three, six and 10 years, the Nikkei report said.

It is assessing institutional investor demand and will soon determine the issuance terms, including interest rates, the report added.

Honda's chief executive, Toshihiro Mibe, on Friday obtained investor backing for his reappointment to the board after apologising to shareholders for the company's poor financial performance.

The company forecast 500 billion yen profit this year, betting on cost-cutting measures and its profitable motorcycle business.

Reuters could not immediately contact Honda for comment.

($1 = 161.9200 yen)