Japan ‘May Be’ Close to a Downgrade: S&P

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Japan ‘May Be’ Close to a Downgrade: S&P
24 November 2011, by Aki Ito (Bloomberg)
http://www.bloomberg.com/news/2011-11-24/s-p-says-may-be-right-it-s-closer-to-japan-downgrade-as-finances-worsen.html

Excerpt:

Standard & Poor’s said Japanese Prime Minister Yoshihiko Noda’s administration hasn’t made progress in tackling the public debt burden, an indication it may be preparing to lower the nation’s sovereign grade.

“Japan’s finances are getting worse and worse every day, every second,” Takahira Ogawa, director of sovereign ratings at S&P in Singapore, said in an interview. Asked if that means he’s closer to cutting Japan, he said it “may be right in saying that we’re closer to a downgrade. But the deterioration has been gradual so far, and it’s not like we’re going to move today.”

A reduction in S&P’s AA- rating would be a setback for Noda, who took office in September and has pledged to both steady Japan’s finances and implement reconstruction from the nation’s record earthquake in March. It’s unrealistic for Japan to think it can escape the debt woes that have engulfed nations overseas unless it can control its finances, according to Ogawa.

While Japan has enjoyed borrowing costs at global lows for its debt, the International Monetary Fund said in a report released on its website yesterday there’s a risk of a “sudden spike” in yields that could make the debt level unsustainable. Japanese government bonds fell after Ogawa’s remarks, sending 10-year yields to the highest level in three weeks.

Developed nations are struggling to retain investor confidence in their bonds after borrowing deepened with the global recession and financial crisis. Germany yesterday failed to get sufficient bids to sell all of the 10-year securities it offered to sell.

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Moody's warns against lack of tax hike in Japan
2 May 2012, Manila (Reuters)
http://www.reuters.com/article/2012/05/02/japan-moodys-idUSL4E8G231M20120502

The lack of a sales tax increase in Japan could bring forward "the day of reckoning" in the Japanese government bond market and cause investors to demand higher premiums, Tom Byrne, a senior vice president of Moody's Investors Service, said on Wednesday.

The rating agency is watching the fate of Japan's plan to double the 5% sales tax as it is a "significant issue," Byrne told reporters at the Asian Development Bank meeting in Manila.

Moody's puts Japan's rating at Aa3 with a stable outlook but has warned the rating would be reviewed if the tax hike plans are delayed further.

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Fitch downgrades Japan to A+, outlook negative
22 May 2012, by William L. Watts - Frankfurt (MarketWatch)
http://www.marketwatch.com/story/fitch-downgrades-japan-to-a-outlook-negative-2012-05-22-5911734

Fitch Ratings on Tuesday downgraded Japan to A+ and issued a negative outlook on the country's credit rating, citing rising public debt levels. Japan's long-term foreign rating had stood at AA and its local currency issuer default rating was previously at AA-.

"The downgrades and negative outlooks reflect growing risks for Japan's sovereign credit profile as a result of high and rising public debt ratios," said Andrew Colquhoun, head of Asia-Pacific sovereigns at Fitch, in a news release.

"The country's fiscal consolidation plan looks leisurely relative even to other fiscally-challenged high-income countries, and implementation is subject to political risk," he said.