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Toshiba plunges 26% after rating downgrades

Satoshi Tsunakawa, president and CEO of Toshiba, bows as he arrives for a news conference in Tokyo, Japan, on Tuesday, December 27, 2016.
Kiyoshi Ota | Bloomberg | Getty Images
Satoshi Tsunakawa, president and CEO of Toshiba, bows as he arrives for a news conference in Tokyo, Japan, on Tuesday, December 27, 2016.

Japan's Toshiba nosedived nearly 26 percent on Thursday, marking a fifth consecutive session decline, after credit downgrades from both Moody's and S&P Global Ratings.

Moody's downgraded Toshiba to CAA1 on Wednesday, and placed its ratings on review for further downgrades over concerns about the sustainability of the Japanese firm's near-term liquidity and its corporate governance framework.

S&P Global Ratings also lowered its ratings for Toshiba, downgrading its long-term corporate credit to B- from B, and its senior unsecured debt ratings to B+ from BB-. The ratings agency also put Toshiba's ratings on a negative watch.

Toshiba was trading down 17.33 percent at 257.7 yen by 12:10 pm HK/SIN, after falling as much as 25.5 percent earlier in the session.

The diversified electronics conglomerate fell 20.4 percent or 80 yen to 311.6 yen a share on Wednesday morning and remained untraded for the rest of the session after hitting its daily downward limit of 80 yen on the Tokyo stock exchange.

The exchange sets limits in yen amounts under a tiered system based on the previous share price close

Since Monday, Toshiba's shares have plummeted 39.5 percent after the Nikkei business daily reported that Toshiba might have to book a one-off loss of around 100 billion yen ($850 million) on a U.S. nuclear power acquisition made by its Westinghouse operation last year.

The firm formally announced late on Tuesday that cost overruns at the U.S. nuclear business might result in "several billion dollars" in goodwill charges.

"This will result in a negative impact on Toshiba's financial results…though the figures are still subject to determination," Toshiba said in a statement. Further details have not been released.

Toshiba had suffered from an accounting scandal in 2015, in which profits were overstated by more than $1 billion and resulted in the resignation of its then-current chief executive and two former CEOs who had retained senior company posts. It was also fined a record amount of 7.37 billion yen ($60 million) by Japanese regulators.

The electronics conglomerate has remained on the Tokyo Stock Exchange's watch list, and will not be able to raise capital on the stock market.

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