A looming writedown at Japanese conglomerate Toshiba has wiped almost $5 billion off its value in two days and prompted a credit rating downgrade, as the company grapples to plug a potential multi-billion dollar hole. 

Toshiba said last night that cost overruns at a US nuclear business it bought from Chicago Bridge & Iron last year, CB&I Stone & Webster, meant it could face 'several billion dollars' in charges, acknowledging a bruising overpayment. 

It did not comment on whether that would wipe out its asset value and tip the company into negative net worth. 

Executives said it could take until February to pinpoint the exact impact.

But Toshiba shares took an immediate hit today, falling 20% to hit the Tokyo exchange's daily downward limit. 

That follows a 12% drop on Monday after initial warnings from the group. 

Investors fretted that a blow to the group's finances could even weaken its competitiveness in its core semiconductor business - specifically investment in 3D NAND, a new advanced type of flash memory - or result in firesales and dilutive share issues. 

For the first time in seven years, the value of the group fell below that of tech rival Sharp. 

Rating agency Standard & Poor's downgraded Toshiba, already in junk territory, to B- from B, with a "negative" outlook. 

S&P said it expected shareholder equity to "drastically shrink" as a result of the writedown, eroding the group's resilience, while expected higher working capital would burn more cash. 

"Toshiba's ability to enhance its shareholders' equity is likely to continue to be difficult for the foreseeable future," S&P said, adding it also saw "persistently tough business conditions".

Toshiba is still burning cash despite a positive bottom line in the first half of the financial year and cannot raise more capital on the stock market while it remains on Tokyo's watch list, where it has been since a 2015 accounting scandal.

Toshiba has said it will consider all options to bolster its finances, even "the positioning" of its nuclear business which is centred around Westinghouse, a US firm bought in 2006.