ALL - Sony Debt Rating Downgraded

PlayStation News by Lyndon M STAFF 1136 days ago

Fitch Ratings, a company that assesses debt risk level, has just downgraded Sony´s rating to BBB+. This is just 3 notches above the dreaded ¨Junk¨ rating. Several reasons were given for the rating adjustment:

# Sony´s ¨game segment will likely incur large losses over the next three to five years¨
# ¨Sony can no longer price its products at a material premium to its competition¨
# Delay of the PS3 in Europe
# The big Sony battery recall
# The ¨PS3 is likely to face more severe competition than ¨
# ¨Sony has also been showing weaker financial results and credit metrics compared to its rivals in recent years¨

A negative outlook on the debt was also put on, indicated future downgrades could be expected. What this means overall is it will cost Sony more to borrow money and therefore making it more expensive to finance operations. This could also affect the possibility of price reductions on the PlayStation 3 in the future, making it harder to get more in line with the competition if they reduce prices as well.

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