Sony and Panasonic downgraded to junk bond status
Ratings agency Fitch has announced it is downgrading Sony and Panasonic’s debt ratings to below investment grade, with both companies now receiving the “junk bond” BBB-minus debt rating.
Reuters reports the ratings agency has a weak outlook on Sony’s home entertainment, sound, mobile products and communications segments, while Panasonic is suffering from weakened competitiveness in its core television and display panels businesses.
Both companies, once dominant players in the consumer electronics market, are now suffering from tough competition from Apple and Samsung, particularly in higher-margin product categories such as smartphones and tablets.
While the ratings agency acknowledges restructuring plans at both companies, including Sony CEO Kazuo Hirai’s ongoing One Sony program, the downgrade suggests Fitch does not believe the companies are progressing fast enough.
The news comes as a blow to Sony, which last week announced plans to raise $US1.82 billion through the sale of convertible bonds, a task made significantly more difficult by having a below investment grade debt rating at a major ratings agency.
Last week, SmartCompany reported ratings agency Moody’s had cut Sony’s debt rating to one notch above junk status.