Fitch cuts Panasonic and Sony debt ratings

TOKYO: Ratings agency Fitch downgraded the debt ratings of Japan’s Sony Corp. and Panasonic Corp. to “junk” status citing weakness in their consumer electronics and TV operations, further diminishing the luster of the once-great Japanese brands.
The cut to below investment grade, the first by a ratings firm, comes as the floundering Japanese tech giants face weak demand and fierce competition from Apple Inc. and Samsung Electronics.
Fitch downgraded Sony by three notches to BB-minus from BBB- minus, saying meaningful recovery will be slow. The move came after Sony, the maker of PlayStation game consoles and Vaio laptops, recently announced plans to raise 150 billion yen ($ 1.82 billion) through the sale of convertible bonds.
In a separate statement, Fitch cut Panasonic to BB from BBB-minus, a two-notch downgrade, citing weakened competitiveness in its TVs and display panels as well as weak cash generation from its operations. It has a negative outlook on both the companies.
Panasonic recently cut its forecast and warned it will lose close to $ 10 billion in the year to March, as it writes off billions of yen in tax-deferred assets and goodwill related to its mobile phone, solar panel and small lithium battery businesses.