Nidec shares slide amid accounting probe

Nidec Corp. shares fell for seven consecutive trading days as an ongoing accounting probe further chipped away at the Japanese company’s creditworthiness with another downgrade by Moody’s Ratings.

The stock dropped as much as 4.6% on Friday after Moody’s lowered its issuer rating two notches to Baa3 from Baa1 and kept the world’s biggest manufacturer of mini motors on review for a possible further downgrade. The rating company had already lowered from A3 to Baa1 in late October.

The stock has fallen 40% since the company announced a third-party investigation into cases of improper accounting on Sept. 3. Since then, the spread on Nidec’s bond maturing November 2027 has widened to about 219 basis points as of Nov. 20, from around 28 bps before the announcement, according to data compiled by Bloomberg.

Moody’s action adds further doubt about the reliability of Nidec’s financial disclosures. It blamed a large operating loss in the first quarter and sluggish first-half results for the latest rating’s cut, while also citing the company’s auditor pulling its opinion for its semiannual report.

The downgrade came as a “strong surprise,” said Kengo Koetaka, a credit analyst at Mizuho Securities Co.

As Nidec bonds remain investment-grade, the latest downgrade is unlikely to result in a significant further widening of spreads, Koetaka said in a report.

(Read more: “Nidec finds more suspected cases of accounting fraud“)