Fitch cuts Sony, Panasonic ratings to “junk”
23 Nov 2012
Global credit rating agency Fitch Ratings yesterday downgraded once-dominant Japanese consumer electronic giants Sony Corp and Panasonic Corp to ''junk'' status, inflicting a serious blow to the companies struggling to restructure their businesses and striving for a turnaround.
In two separate statements, Fitch said that Sony's and Panasonic's long-term debt rating has been slashed to 'BB-'from 'BBB-' rating, both with negative outlook, indicating non-investment grade.
Fitch is the first major rating agency to give ''junk'' status to the Japanese companies although Moody's Investors Service and Standard & Poor's have recently downgraded Sony and Panasonic to near junk status.
Regarding Sony, Fitch believes that meaningful recovery will be slow, given the company's loss of technology leadership in key products, high competition, weak economic conditions in developed markets and the strong yen.
Continuing weakness in the home entertainment and sound and mobile products and communications segments will offset the relatively stable music and pictures segments and improvement in the devices segment which makes semiconductors and components, Fitch said.
The business of Sony Financial Holdings (SFH), in which Sony owns a 60-per cent stake, remains relatively stable and has a significantly stronger credit profile than the rest of the Sony group. As SFH's business is highly regulated, it is not included in the analysis by Fitch.
