TOKYO (AFP) ― Moody’s cut its credit rating on Sony to junk on Monday, saying the Japanese electronics giant had more work to do in repairing its battered balance sheet.

The international ratings agency lowered its view of the company to “Ba1” from “Baa3,” meaning its debt is now seen as below investment grade, a move that threatens to push up Sony’s borrowing costs.

“While Sony has made progress in its restructuring and benefits from continued profitability in several of its business segments, it still faces challenges to improve and stabilize its overall profitability,” Moody’s said in a statement.

“Of primary concern are the challenges facing the company’s TV and PC businesses, both of which face intense global competition, rapid changes in technology, and product obsolescence.”

The downgrade was the latest to hit Japan’s embattled electronics industry ― including Sony rivals Sharp and Panasonic ― which has continued to lose ground to overseas rivals even as a weak yen helped boost their profitability.

“Sony’s profitability is likely to remain weak and volatile, as we expect the majority of its core consumer electronics businesses ― such as TVs, mobile, digital cameras and personal computers ― to continue to face significant downward earnings pressure,” Moody’s said.

It added that Sony’s popular new PlayStation 4 console would help earnings at its videogames unit, but warned that profitability would likely not top levels seen in previous years.