Moody’s drops Toshiba, debt

Moody's Japan K.K. said it downgraded Toshiba Corp.’s corporate family rating and senior unsecured rating by three notches to B2 from Ba2.

The agency also downgraded Toshiba's subordinated debt rating by four notches to Caa2 from B1 and affirmed its short-term rating of Not Prime.

The B2 corporate family rating and long-term senior unsecured bond ratings, as well as the Caa2 subordinated debt rating, remain under review for further downgrade.

"The downgrade reflects Moody's deepening concerns over the sustainability of Toshiba's near-term liquidity situation and its ability to maintain positive internal cash flow following its own successive downward earnings revisions, as well as the substantive and rapid erosion in its equity base," Moody's vice president and senior analyst Masako Kuwahara said in a news release.

"In combination with large near-term debt maturities and the potential, in our opinion, for imminent breaches of its bank debt covenants, Toshiba's ability to maintain its solvency must be drawn into question if ongoing bank support, which cannot currently be assured, becomes absent."

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