(Bloomberg) -- Nissan Motor Co. bonds are trading wider this morning as investors react to news that the company's chairman was arrested for violations of financial law and will be removed from his post.
A few block trades pushed Nissan's 3.875% notes due in 2023 about 25 basis points wider, the biggest single-day move since the notes were issued in September. The company's two-year notes are among the most active in the investment-grade market this morning and fell through all-time lows.
Carlos Ghosn, chairman of Nissan and Chief Executive Officer of Renault SA, was detained Monday in Tokyo over a suspected breach of Japanese financial laws, Nissan CEO Hiroto Saikawa said at a news conference. Nissan has been investigating both and Ghosn and Director Greg Kelly for months. Renault bonds also fell this morning.
"Over many years" Ghosn and Kelly were reporting compensation to securities regulators in Tokyo below the actual amount in order to reduce Ghosn's disclosed pay, Nissan said in a statement. In addition, the company alleged “numerous other significant acts of misconduct have been uncovered, such as personal use of company assets.”
The company's bonds trade relatively infrequently as several have around $500 million outstanding, a small size for an investment-grade rated security. Nissan's five-year notes have traded in record volumes this morning, and its two-year notes are seeing their second-most active day.
To contact the reporters on this story: Jeremy Hill in New York at jhill273@bloomberg.net;Natalya Doris in New York at ndoris2@bloomberg.net
To contact the editor responsible for this story: Christopher DeReza at cdereza1@bloomberg.net
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