The credit ratings agency, Fitch, has downgraded the ratings of Panasonic and Sony to junk status.
According to Channel News, Sony’s rating was reduced to BB- and Panasonic’s to BBB-, with the negative point meaning that the agency feels that the two companies are likely to default on debts
This ratings revision will have the added effect of making it harder for the two companies to borrow money.
“The downgrade reflects Fitch's belief that meaningful recovery will be slow, given the company's loss of technology leadership in key products, high competition, weak economic conditions in developed markets and the strong yen,” commented Fitch on Sony’s rating.
Meanwhile, Panasonic has been downgraded due to strong competition from other Asian companies.
“The company's market position in its core business suffered from strong competition from Korean manufacturers, which led to a subsequent downsizing of the business,” stated Fitch.
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