Nokia Corporation (NYSE:NOK)’s rating was downgraded from “market perform” to “underperform” by Tavis McCourt and Daniel Toomey, analysts at Raymond James Global Research, after the company announced its plan to offer convertible bonds to raise €750 million to boost its cash position.

Nokia

In a research note to investors, McCourt and Toomey said the company’s convertible debt offering highlights Nokia’s liquidity problems, and it might create equity dilution in a liquidation.

The analysts expect that the notes, if converted to shares, the stock price would be 30 percent premium of the current value of the stock per share. McCourt and Toomey states that the notes could dilute common shareholders’ shares by approximately 8 percent.

The analysts wrote, “It is not obvious why Nokia Corporation (NYSE:NOK) would need this liquidity, unless it is preparing for a much more dire scenario than what is in our model, and if it is, why wouldn’t it simply stop paying the €750 million annual dividend before diluting shareholders (it probably will). Nokia Corporation (NYSE:NOK) (ex-NSN) appears to have plenty of liquidity today, with €7.5 billion in cash and net cash of €3.6 billion, but each time management “buys more time” with liquidity, it lowers our liquidation estimate.”

Timo Ihamuotila, Nokia Corporation (NYSE:NOK)’s chief financial was quoted in the report from the Financial Times, saying that Nokia’s convertible bond offering is significant for the company. He explained, “This offering is designed to further strengthen our financial position and liquidity profile, while allowing us to benefit from the current attractive long-term financing opportunities in the convertible bond market.”

McCourt and Toomey also reduced Nokia Corporation (NYSE:NOK)’s price target from $3.25 per share to $3 per share. They also adjusted the EPS losses estimated for the company for the fourth quarter to 3 cents per share, and 33 cents per year for the full-year 2012.

Nokia Corporation (NYSE:NOK) also announced today, the availability of the Nokia Lumia 510, powered by Windows 7.5 in emerging markets. The price of the smartphone is $199, and it will be available in China and India in November.

The analysts compared the specifications of the Lumia 510 with other smartphones. They found that Lumia 510’s hardware specs are similar to the Samsung S7562 and Huawei Ascend G330D. McCourt and Toomey is uncertain if it would be able to sell a new OS to China with the same price range as Samsung products powered by the Android OS.