Moody's cuts Sony rating to one notch above junk
TOKYO (Reuters) - Sony Corp's long-term debt rating was lowered one notch by Moody's Investor Service to the lowest investment grade level because of shrinking demand for its consumer electronics.
The downgrade to Baa3 from Baa2 follows a one-notch cut by Moody's in October, which also said its outlook on the firm remained negative. Another cut would lower its rating to junk, forcing some funds to offload its debt and curtailing the company's ability to raise money in credit markets.
"Without robust restructuring in the coming 12-18 months, Sony's non-financial services businesses will at best achieve roughly break even, and are also at risk of remaining unprofitable," the rating agency said in a report.
Sony, in the quarter ended Sept 30, posted a small operating profit, after a loss a year ago, helped by the sale of a chemicals business that offset weak demand for its TVs. The company is also mulling the sale of its New York headquarters, which would also provide a boost to income.
The company maintained its profit outlook for the full business year, but expects to sell fewer of its hand-held PSP and Vita consoles. It also trimmed forecasts for sales of TVs and compact digital cameras.
In the past several months Sony has spent $1.8 billion to buy companies ranging from medical equipment to cloud gaming.
Shares in Sony, valued at less than $12 billion, have dropped around two-fifths since the start of the year. Its stock fell 0.9 percent to 879 yen on Friday.
(Reporting by Tim Kelly; Editing by Muralikumar Anantharaman)
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