Standard and Poor's downgrades Sony credit rating

Sony's corporate credit rating has been downgraded by finance company Standard and Poor's, with the group citing the lack of a likely recovery for the company's core business in the near future.

The company is now rated A- for long term borrowing and A-2 for short term loans.

"The CreditWatch listing is based on our view that the likelihood of Sony's weak earnings persisting has increased as there are no signs of a halt to the deterioration in the earnings of the company's core flat panel TV business," read a statement from the company.

"In addition, Sony's financial burden is likely to increase in tandem with the company's making Sony Ericsson a wholly owned subsidiary. Taking these factors into consideration, we have concluded that we need to review the prospects for Sony's operating and financial performance and verify the effects on the rating."

The area of Sony's business which includes both flat-panel TVs and the PlayStation business registered a loss of $449 million during a recent financial report marking a third consecutive year in the red for the company as a whole. That period of losses is expected to continue next year.

"Standard & Poor's will resolve the CreditWatch listing after meeting with Sony management and verifying the prospects for an earnings recovery in the company's mainstay electronics business and improvement in its financial soundness for the next few years," continued the company's statement.

For an in-depth view on the current financial and business position which Sony occupies, read our Sony Stock Ticker piece from GamesIndustry.biz contributor Rob Fahey, published yesterday.