Nokia Oyj, the world’s largest mobile device manufacturing company had their debt rating cut to two steps above junk by Moody’s Investors Service. Moody’s cites the cut due to “a severe weakening” in Nokia’s market position. The senior debt rating was reduced by two steps to Baa2.
This is the second-lowest rating among 10 investment-grade rankings. This is Moody’s second downgrade of Nokia in four months. This change affects about $5.1 billion in senior debt.
?This deterioration has been caused by a loss of competitiveness of Nokia?s Symbian-based smartphone portfolio and the transition of its operating systems to the Windows Phone platform,? stated Moody?s analyst Wolfgang Draack. Draack also cited ?increasing price pressure and gaps in the company?s mobile-phone portfolio that are now being filled.?
Nokia’s handset shipments had declined 20% to 88.5 million in the second quarter. This is their lowest quarterly volume in 5 years. ?Moody?s rating action will not have a material impact on our current financing costs,? stated Nokia spokesman Doug Dawson.