Moody's cuts Nokia's debt rating to lowest investment level

Nokia's debt rating takes a nose dive

Today, credit-rating bureau Moody'south, cut Nokia Oyj'south debt rating to the lowest investment-form level. This comes on the heels of Nokia's announcement last calendar week that they would be posting a 3 pct loss this quarter and would likely see a loss in Q2 also. Citing deteriorating sales of depression-end phones, Moody'due south dropped Nokia's debt rating one step, to Baa3, with a negative outlook, which ways that the rating could be lowered even farther, if things don't pick up for the Finnish manufacturer. Moody's decision affects an estimated $5.2 billion in debt and puts their rating more in line with those of Standard & Poor and Fitch, who were much quicker to lower their ratings.

"Moody's believes that the structural change facing Nokia's Mobile Phones segment may not be easy to address, such as the market share gains recorded by makers of very low-end phones or new promotions by Chinese carriers," Moody'due south analyst Wolfgang Draack said in the statement.

The alter in Nokia's rating has patently affected the visitor's stock. Shares accept been trading down ii.4% in Helsinki and credit-default swaps jumped to a record-high 516, up from 354 at the get-go of April.

In a press release that was put out soon after the Moody's annunciation, Nokia Executive Vice President and CFO, Timo Ihamuotila, said that "Nokia is quickly taking activity. Nokia volition continue to increment its focus on lowering the company's cost structure, improving cash catamenia and maintaining a stiff fiscal position." Nokia also tried to reassure people by noting that Nokia has approximately 4.9 billion Euros ($6.iv billion) in cash reserves.

Nokia'south Lumia line of Windows Telephone devices is selling well, especially the wildly pop Lumia 900, which has seen potent sales. Stephen Elop, CEO of Nokia, has said that he and his mates continues "to increment the clock speed of the visitor." Nokia is slated to break ground on a new manufactory in Vietnam, which is expected to start churning out low-end phones in 2022, a year behind schedule due to stalled negotiations with the Vietnamese government.

Source: Moody's, Nokia; Via: Bloomberg

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