Credit ratings agency Fitch has downgraded Sony's credit rating from triple B minus to double B minus – a three notch downgrade.
Fitch's ratings guide lists double B ratings as indicating that companies are vulnerable to defaulting on debt over time, but have sufficient flexibility for now to keep servicing that debt”.
The Financial Times reports that the reason for the move the loss of technology leadership in key sectors and, of course, the strong Yen. Most of its troubles stem from its TV business.
Sony recently posted it seventh consecutive loss-making quarter.
The paper concludes that the recovery of both companies rests on aggressive and far-reaching restructuring”. Fitch's Asian corporate research Matt Jamieson added: This wasn't an easy decision. But their reputations have been hit so much that it will take a long while to crawl back.”
The question now is whether other credit rating agencies will follow Fitch's lead.