Sony Debt Ratings Outlook Has Turned “Positive,” Credit Agency Fitch Says
"There is a high likelihood of a rating upgrade" should the conglomerate continue to see stabilizing earnings and benefits from restructuring efforts, it explains.
Debt ratings agency Fitch has turned positive on Sony Corp.'s outlook, revising its credit outlook Monday from "stable" to "positive."
Fitch downgraded Sony's debt ratings to junk status, making it non-investment grade, in 2012. It has the lowest rating on the entertainment and consumer electronics conglomerate out of the three major debt ratings agencies.
The improved outlook means the agency is more likely to upgrade its ratings on the company's debt. Fitch affirmed its "BB-" rating on Sony's debt Monday. That is three notches below investment-grade.
Better debt ratings make borrowing cheaper for companies.
Sony, led by CEO Kaz Hirai, recently posted a quarterly profit and is forecasting a return to profitability in the fiscal year that ends in March 2016. That would be the company's first profitable year in three years thanks in part to a weaker yen and restructuring moves.
"There is a high likelihood of a rating upgrade should the leverage remain at a lower level and earnings stabilize further in its key operating segments," Fitch said. He said restructuring efforts would boost profits and the company's device unit looks like a key growth driver. "The outlook revision reflects expected improvements in Sony's credit profile as a result of continued restructuring and our belief that the company is positioned to make operating profits," Fitch explained.
The Fitch report didn't mention Sony's film unit.
After Fitch cut its Sony debt rating to junk status late in 2012, Moody's followed in early 2014. S&P, the third big agency, has the lowest investment-grade debt rating on the company. Earlier this year, it also gave the conglomerate a "positive" outlook.