Japan's electronics and electrical products market is fading, Panasonic and Sony are at the same time trapped in the credit class quagmire

Absrtact: A Japanese electronics store in Tokyo also exhibits Panasonic and Sony products according to foreign media reports, Japan's electronic and electrical products market is declining, Panasonic and Sony at the same time trapped in the credit rating mire. Recently, the well-known credit rating company Fitch will also Panasonic

The photo shows Panasonic and Sony products at an electrical store in Tokyo, Japan

According to foreign media reports, Japan's electronics and electrical products market is declining, Panasonic and Sony at the same time trapped in the credit rating mire. Recently, Fitch, a well-known credit rating company, also downgraded Panasonic and Sony's credit rating to "junk". According to analysis, Panasonic will have a better chance of recovery than Sony.

In Thursday, Fitch downgraded Panasonic's credit rating by two to BB, cutting Sony's credit rating by three levels to BB. It is the first time that one of the big three credit rating agencies has downgraded Japan's two big electronics giants to "junk" levels.

The other two authoritative credit rating agencies, Moody's and Standard Poole, have adjusted the credit ratings of Panasonic and Sony to the same level and are only one step away from the "junk" level.

In a conference call in Friday, Matt Jameson, head of Fitch Asia-Pacific, explained that Panasonic "has a relatively stable business of home appliances and will still bring profits", but Sony's "most of the electronics business is constantly losing money and unsustainable".

Currently, Japan's television industry is being hit by Samsung and other foreign producers, which are cheaper and more innovative. At the same time, Apple's tablet and smartphone in the United States occupy a formidable dominance in their respective fields. Japanese companies are forced to survive in the cracks.

Earlier, a troubled Japanese electronics giant, Sharp, received 4.6 billion of billions of dollars in loans from Mizuho Financial Group and Mitsubishi UFJ Financial Group, but the outlook was grim. Now investors are turning to Panasonic and Sony.

Panasonic and Sony have chosen a different path to revive.

Panasonic is pinning its hopes on the business of appliances, solar panels, lithium batteries and automotive components. At present, home appliance sales accounted for only 6% of Panasonic's total sales, resulting in more than 6% profit margins, which accounted for a large proportion of Panasonic's total profit.

Sony, by contrast, puts its chips in the competitive mobile-device business, trying to snatch market share from Samsung and Apple. Meanwhile, Sony will continue to develop its digital camera and gaming business.

Unfortunately, both Panasonic and Sony's credit ratings have been downgraded. This makes it harder for them to get the favor of investors and more difficult to achieve the financing needed for business restructuring.

However, the impact of the downgrade was limited, since Panasonic and Sony had previously received bank support.

In October of this year, Panasonic still received a 7.6 billion-dollar loan commitment from Sumitomo Mitsui Financial Group and Mitsubishi UFJ Financial Group, despite a 10 billion dollar loss expected this fiscal year. The latter is a commitment to help Panasonic, so that Panasonic does not have to go through the credit market to finance.

Sony is to sell its chemical business to the Japanese Policy investment bank, which will achieve a total profit of 1.63 billion dollars this fiscal year. And before the credit rating was downgraded, Sony announced earlier that it would sell convertible bonds for $1.9 billion trillion.

The structural model of StarMine, a Thomson Reuters company, gives Panasonic and Sony an implicit rating of BB. Sharp's implied rating was B--three lower than Panasonic and Sony.

S & P rated Panasonic and Sony's credit ratings as BBB, the second-lowest level of investment. Moody's downgraded the two companies to Baa3, the cheapest level of investment. Moody's outlook for the two companies is "negative", while standard Poole's outlook for Panasonic is "stable" and the outlook for Sony is "negative".

In Friday, Japan temporarily closed the stock market because of the national holiday, unable to know the stock market reaction.