Fitch cuts Sony, Panasonic to 'junk'
The downgrades deal a further blow to the floundering Japanese tech giants which have been facing weak demand and fierce competition from Apple Inc and Samsung Electronics.
A strong yen and bumps in China, where growth has slowed and Japanese goods have been targeted in sometimes violent protests recently, have also weighed on their earnings.
The credit rating agency on Thursday downgraded Sony by three notches to BB- minus from BBB minus, saying meaningful recovery will be slow.
Fitch believes that continuing weakness in the home entertainment and sound and mobile products and communications segments will offset the relatively stable music and pictures segments and improvement in the devices segment which makes semiconductors and components, it said in statement.
The downgrade sent Sony's five-year credit default swaps (CDS), insurance-like contracts against debt default or restructuring, 5 basis points wider to 382.5/402.5 basis points.
Panasonic's CDS for the same maturity were quoted at 295/315 basis points, 15 basis points wider than in Thursday morning Asian trade.
In a separate statement, Fitch cut Panasonic to BB from BBB-minus, a two-notch downgrade, citing weakened competitiveness in its TVs and display panels as well as weak cash generation from its operations.
Sony shares were down 0.3 pct in Frankfurt in low volume on Thursday. The shares ended 1.8 percent higher at 834 yen in Tokyo on Thursday before the
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