Moody’s Investors Services on Tuesday said it downgraded its rating of Toshiba Corp credit to junk after the Japanese conglomerate forecast a record net loss for this fiscal year and cut jobs, following a $1.3 billion accounting scandal.
Moody’s cut Toshiba’s long-term senior unsecured bonds to speculative grade Ba2 from Baa3, and said it would review the rating for further downgrade.
“The downgrades were prompted by Toshiba’s announcement of its structural reform plan and financial forecast for the fiscal year ending 31 March 2016,” Moody’s senior analyst Masako Kuwahara said in a statement.
“We expect that Toshiba’s leverage will stay high over a prolonged period, given that its restructuring costs will exceed our previous estimates, and our expectation of improvement in earnings, if any, for each business segment will be very gradual even after the restructuring.”
Toshiba in August said it had overstated profits beginning in the business year through March 2009.
On Monday, the firm said it would cut around 5 percent of its staff and sell assets to focus on semiconductors and nuclear energy. It said restructuring costs would push its loss for the year to about 550 billion yen ($4.53 billion).
Analysts have questioned whether such streamlining can help turn around the 140-year-old company considering falling profit margins in the chip industry and a nuclear phase-out in developed countries following the 2011 Fukushima disaster.