Moody’s lowers Toshiba, debt

Moody's Japan K.K. said it downgraded Toshiba Corp.’s corporate family rating and senior unsecured debt rating to B3 from B2, and its subordinated debt rating to Caa3 from Caa2.

The outlook is negative.

At the same time, the agency affirmed the commercial paper rating of Not Prime.

This action concludes the review for downgrade initiated on Dec. 22.

"The rating downgrade principally reflects the consideration that while we expect Toshiba to likely maintain an adequate level of near-term liquidity because of its sale – as announced on March 17, 2016 – of Toshiba Medical Systems Corp. (TMSC) to Canon Inc. (Aa1, review for downgrade), the strength of the company's core business operations and ability to manage its high debt load are significantly challenged and uncertain in the longer term," Moody's vice president and senior analyst Masako Kuwahara said in a news release.

"In addition, the ongoing liquidity of its operations remain highly dependent upon the continued co-operation and goodwill of its bankers."

"At the same time, the B3 rating incorporates an expectation that Toshiba will maintain support from its banks, such that it can maintain its solvency. However, should this not eventuate, then the ratings would likely be subject to further immediate negative pressure," Kuwahara added in the release.

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