Sony rating lowered to one point above junk status by investors

Summary:Shrinking consumer demand has resulted in Sony's investment grade level taking a further beating.

Investor services firm Moody's has reclassified the ailing electronics firm to one point above junk status.

sony investor level one point above junk status

Shrinking consumer demand for electronics has resulted in the Japanese firm's long-term debt rating being lowered one notch, according to Reuters.

Moody's Investor Service now considers the firm applicable to the lowest investment grade level possible before hitting "junk status". Once a company hits this grade, otherwise known as a "BB" rating or "high-yield bond", any investment made is high-risk by default -- something which could impact the company's plans to restructure and recover. 

In October, the investment firm began downgrading Sony's status, believing the electronics maker's prospects, despite restructuring efforts, remained negative.

If Sony's rating is cut by one more point, some funds may be forced to offload debt, and the firm may find itself restricted in how much money it would be allowed to raise 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 recent report.

Sony's Q2, ending September 30 , resulted in an operating profit of $388 million, in comparison to a $20 million loss in the same quarter within FY2011. The ailing electronics maker made a loss of $5.7 billion last year and $312 million in the first quarter.  

As part of restructuring efforts implemented by CEO Kazuo Hirai, the electronics giant plans to close a number of offices within Tokyo, Japan, has created a voluntary retirement program for employees and the eventual dismissal of 10,000 workers from its global workforce. 

Topics: Tech Industry

About

Charlie Osborne, a medical anthropologist who studied at the University of Kent, UK, is a journalist, freelance photographer and former teacher. She has spent years travelling and working across Europe and the Middle East as a teacher, and has been involved in the running of businesses ranging from media and events to B2B sales. Charli... Full Bio

zdnet_core.socialButton.googleLabel Contact Disclosure

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Related Stories

The best of ZDNet, delivered

You have been successfully signed up. To sign up for more newsletters or to manage your account, visit the Newsletter Subscription Center.
Subscription failed.