UPDATE 1-Moody's cuts Nokia rating by 2 notches

Wed Jul 27, 2011 6:18am EDT

- * Cuts Nokia to Baa2, two notches above junk

* Says outlook negative

* Nokia says no material impact on financing cost

(Adds comments from Nokia, Moody's)

HELSINKI, July 27 (Reuters) - U.S. ratings agency Moody's cut its credit rating on bonds of struggling Finnish phone maker Nokia Oyj by two notches on Wednesday and said the outlook on the rating was still negative.

A spokesman for Nokia said the rating cut would have no material impact on the company's current financing costs.

Fitch and S&P cut Nokia's credit ratings last month.

Last week Nokia reported a steep net loss for the June quarter and surrendered its lead in the global smartphone market -- which it created in 1996 with its first Communicator model -- to rival Apple .

In recent years Nokia has failed to match the appeal of Apple and phones using Google software. It is now pinning its turnaround hopes on a new suite of devices using Microsoft software, which are due to start reaching consumers in late-2011.

"Visibility for Nokia's future operating metrics such as mobile phones sold or average selling prices is currently very low due to the transition in its product offering," Moody's said in a statement.

However, it said Nokia has maintained a strong liquidity position and capital structure, which should support the transition process by covering possible cash burn. (Reporting by Tarmo Virki; Editing by Erica Billingham)

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