S&P upgrades Panasonic

Standard & Poor’s said it raised the long-term corporate credit ratings on Panasonic Corp. and its subsidiaries by one notch to BBB+.

S&P also said it raised the long-term debt rating on Panasonic and the long-term corporate ratings on its overseas subsidiaries a notch to BBB+.

The outlook is stable.

The upgrades reflect the agency’s view that drastic structural reforms and cost reductions will enable Panasonic to sustain or slightly improve its profitability, which has improved significantly over the past two years.

The upgrades also consider the fact the company has slashed debt thanks to a recovery in business performance, S&P said, as well as asset sales and a likelihood that strong business performance will keep key financial ratios, including debt-to-EBITDA, at healthy levels.

Nonetheless, competition is stiff and the agency said it thinks the positive impact in terms of a boost to earnings is likely to be limited in the next 12 to 18 months.

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