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Moody's upgrades Toshiba's ratings on sale of memory business


According to Market Intelligence, February 2023


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Moody's upgrades Toshiba's ratings on sale of memory business

Moody's raised Toshiba Corp.'s corporate family rating and senior unsecured debt rating to B1 from Caa1, citing "significant improvement" in the company's fiscal strength following the sale of its memory chip unit.

Moody's also lifted Toshiba's subordinated debt rating to B3 from Ca.

The rating agency said the approximately ¥2 trillion sale of Toshiba Memory Corp. to KK Pangea reduced but stabilized the Japanese company's earnings. The memory chip unit represented 90% of Toshiba's fiscal 2017 consolidated operating profit.

Moody's projects net proceeds of ¥1.45 trillion from the sale. It also expects its shareholder's equity ratio to rise to about 30% by the end of fiscal 2018.

Toshiba's ratings could be upgraded if the company can demonstrate stability in earnings and cash flow. Ratings could be downgraded if the company is unable to sustain the projected operating profit margin of around 2% or if its financial profile weakens.

The Moody's upgrade follows a similar move by S&P Global Ratings on June 1.

As of June 15, US$1 was equivalent to ¥110.51.

S&P Global Market Intelligence and S&P Global Ratings are owned by S&P Global.