* Says dwindling sales hurting earnings
* Rating cut to Baa3 from Baa1
* Sony also cut to the same level earlier this month
TOKYO, Nov 20 Moody's Investor Service cut
Panasonic Corp's long term debt rating by two notches
to its lowest investment grade on Tuesday, saying dwindling
sales of its consumer electronic devices were pressuring
The downgrade to Baa3 from Baa1 follows Panasonic's forecast
of an annual loss of close to $10 billion as it writes off
billions in deferred tax assets and goodwill, and comes after a
cut in Sony Corp's rating to the same level this month,
also due to shrinking demand for its consumer electronics.
Thomson Reuters' Starmine structural model, which evaluates
market views of credit risk, debt levels and changes in asset
values gives Panasonic an implied rating of BB-, three ranks
lower than Moody's latest assessment. The implied rating for
Sony is B+.
"Challenging market conditions will continue to hinder the
timely recovery of Panasonic's financial profile," Moody's said
in a report.
In addition to the write-offs, a boycott of Japanese
products by some Chinese consumers over a territorial dispute in
the East China Sea was adding to uncertainty, it said.
Panasonic may need to undertake additional restructuring
measures in some of its more difficult business segments to
restore its earnings in the coming 12 to 18 months, which would
further pressure its balance sheet, it added.
In October the maker of Viera TVs won $7.6 billion of loan
commitments from banks including Sumitomo Mitsui Financial Group
and Mitsubishi UFJ Financial Group, a
financing backstop its says will help it avoid having to seek
capital in credit markets.
Prior to the downgrade, Panasonic's shares fell 3.8 percent
in Tokyo, compared with a 0.1 percent fall in the benchmark
(Reporting by Tim Kelly; Editing by Edwina Gibbs)