S&P lowers Sojitz corporate rating

Standard & Poor's said it affirmed its senior unsecured bond rating on Sojitz Corp. at BB and lowered its long-term corporate credit rating on Sojitz to CC from CCC following the company's unveiling of the details of its financial restructuring package. The long-term rating was removed from CreditWatch where it had been placed on June 8.

The outlook is negative.

S&P said the downgrade reflects the probability that the bailout package will include a debt-for-equity swap.

Sojitz announced that a ¥360 billion capital injection scheduled to take place in late October would involve a debt-for-equity swap, with key creditor banks extending new loans to Sojitz Holdings, which will subsequently be converted to preferred stock of the holding company within a month.

The bond rating was affirmed as S&P had already factored expectations that Sojitz would receive financial support from creditor banks through a debt-for-equity swap or other methods.

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