Panasonic and Sony have had their credit ratings cut to 'junk status' by credit agency Fitch Ratings.
This represents the first time any of the three major ratings agencies has deemed either company to have entered junk-bond territory.
Fitch downgraded Panasonic to BBB- from BB, a two-notch fall, and Sony to BB- from BBB-, a three-level fall.
"Fitch believes that continuing weakness in the home entertainment and sound and mobile products and communications segments will offset the relatively stable music and pictures segments and improvement in the devices segment which makes semiconductors and components," Fitch said.
Since the credit ratings cuts, Fitch has speculated that Panasonic, which predicts a yearly loss of approximately $10 billion (£6.3 billion), has a better chance of recovery than Sony, which has actually forecast profits of $1.63 (£1 billion).
This, according to the head of Asia-Pacific at Fitch, Matt Jamieson, is because Panasonic "has the advantage of a relatively stable consumer appliance business that is still generating positive margins," while "most of their [Sony's] electronic business are loss making, they appear to be overstretched."
The stable consumer business referred to the sales of Panasonic's fridges, washing machines and general home appliances.
But both Japanese firms have been hit hard by the failing TV industry, as well as the massive competition presented by the likes of Apple and Samsung. Consequently, they have had to cut jobs, close down factories and completely revise their respective strategies.
Fellow credit agencies, Moody's Investors Service and Standard & Poor's, have slightly less negative outlooks for the companies.
Moody's rates both Panasonic and Sony at Baa3, the lowest level of the high-grade class, while Standard and Poor's measures them up at BBB, the second-lowest investment grade level.
However, Sharp, another of Japan's struggling electronics companies, which has forecast net losses of £3.5 billion, recently secured loans of £2.8 billion and could gain another £236 million from Qualcomm and Intel by the end of the month. Fitch rates Sharp at B-, which is even lower than its assessment of Panasonic and Sony.