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Standard & Poor’s Lowers Sony’s Credit Rating, Cites Company’s Slow Recovery

September 26, 2012 Written by Sebastian Moss

Ratings agency Standard & Poor’s has lowered its long-term credit ratings on Sony by one notch, based on the company’s slow recovery of its mainstay consumer electronics businesses.

The agency moved Sony from ‘BBB+’ to BBB – two steps above ‘junk’ status. The move comes after Sony was changed from A- to BBB+ in February. Unfortunately, the long-term outlook is negative, with S&P saying:

The pace of recovery in earnings of Sony’s mainstay consumer electronics businesses in fiscal 2012 (ending March 31, 2013) will remain slow. And a strong recovery is not likely to occur until at least fiscal 2013. We could lower the ratings further if Sony fails to demonstrate solid signs of recovery in weakened measures of its credit quality within the next 12 months.

Sony lost in the year to March, its fourth consecutive annual loss and cut a profit forecast for the year. But Kaz Hirai, the new head of Sony, aims to turn things around and return the company to growth. Part of his plans includes a rumored $642 million investment in troubled camera company Olympus.

The downgrading will likely put off a lot of investors and lower Sony’s share price further.