Moody’s lowers Toshiba to junk

Moody’s Investors Service said it downgraded Toshiba Corp.’s long-term senior unsecured bond ratings to Ba2 from Baa3.

Moody’s also said it downgraded Toshiba’s subordinated debt rating to B1 from Ba2 and short-term rating to not-prime from prime-3.

The agency also said it downgraded Toshiba’s Baa3 corporate family rating to Ba2 and withdrew the rating.

Moody’s also said it placed Toshiba’s Ba2 corporate family rating and long-term senior unsecured bond ratings, as well as its B1 subordinated debt rating, under review for downgrade.

The downgrades were prompted by news of Toshiba’s structural reform plan and financial forecast for the fiscal year ending March 31, 2016, the agency said.

The announcement indicated that earnings and cash-flow generation will be significantly below previous expectations, Moody’s said.

Toshiba’s leverage is expected to remain high over a prolonged period, given that its restructuring costs will exceed previous estimates, the agency said.

Any improvement in earnings will be very gradual even after the restructuring, Moody’s added.

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