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Sony debt rating downgraded to ‘junk’

By | Published on Monday 26 November 2012

Sony Corp

Following the news earlier this month that credit ratings agency Moodys had downgraded Sony Corp to a debt rating of Baa3, one above the rating that is officially termed ‘speculative’ but colloquially known as ‘junk’, rival credit raters Fitch have gone one step further, plonking the Japanese conglom into a very tricky position for raising funds.

Both Sony and also-Japan-based rival Panasonic have been moved into a ‘junk’ rating position, with Fitch saying that both companies face major challenges after a number of tricky years, during which rivals have stolen ground in the consumer electronics domain. The strong yen also remains an issue. Fitch’s Matt Jamieson told the Financial Times: “This wasn’t an easy decision, but [both companies’] reputations have been hit so much that it will take a long while to crawl back’.

Quite what impact the Fitch switch will have on Sony’s ability to raise money in the coming months remains to be seen, and may depend on whether the other rating agencies follow suit. But continued talk of Sony’s woes in the consumer electronics space will only add to speculation the firm is considering selling its more successful US-headquartered entertainment division, even though such rumours have always been denied by the corporation’s top guard.



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