Sony hit by poor earnings reports and downgrade threat

Credit default swap spreads on Japan’s largest consumer and electronics group, Sony, widened further this week, following weaker than expected earnings results and the potential threat of a downgrade by Moody’s Investor Services, say traders.

Credit default swaps spreads on five-year protection on Sony widened to mid-price 31bp today, out from 25bp last Friday, and 21bp before the earnings report was issued last Thursday. Moody’s Investor Services also announced yesterday that it has placed the Aa3 long-term unsecured senior debt rating of Sony under review for possible downgrade, reflecting concern that the company may take longer than expected to regain the strong profit and cashflow generation pattern seen before, said the ratings