Ratings agency Standard & Poor's on Wednesday moved Japanese electronics maker Sharp back out of "selective default", just a day after lowering its assessment of the troubled company.

The temporary move into selective default (SD) came Tuesday after Sharp announced that it was issuing preferred securities to its main lenders, instead of repaying loans that were due.

"We lowered the long- and short-term corporate credit ratings to 'SD' because Sharp carried out a de facto debt-for-equity swap," S&P said in a statement.

"We revised the ratings following completion of the transaction, which resolved the situation that we define as 'SD'."

The agency said its long-term corporate credit rating for Sharp now stood at B-, with a B rating for short-term corporate credit.

The once-mighty Sharp, like rivals Sony and Panasonic, has been working to move past years of gaping deficits, partly caused by steep losses in its television unit, which has been hammered by competition from lower-cost rivals particularly in South Korea and Taiwan.

"Sharp faces heightened business risk in its main liquid crystal display (LCD) operation because of a maturing market and shorter business cycles," S&P said.

"Prices of small LCD panels for smartphones are under pressure, and inventories have grown because the Chinese market has matured rapidly."

It warned that Sharp's debt to EBITDA (earnings before interest, taxes, depreciation and amortisation) ratio -- a general measurement of business health -- was high.

"We assess Sharp as having a 'highly leveraged' financial risk profile. Sharp is highly dependent on short-term borrowings, and the average maturity of its debt is short.

"Therefore, we consider the potential need for massive refinancing a negative factor and incorporate this into our ratings."

In May Sharp announced it was cutting 10 percent of its 49,000-strong workforce worldwide as part of a turnaround plan intended to keep it afloat after posting a bigger-than-expected $1.86 billion annual loss.

The embattled Aquos-brand maker said it would sell the building that houses its Osaka headquarters to raise cash, roll out unspecified pay cuts, and launch a drastic capital reduction plan to wipe away huge losses.