TOKYO (MNI) – Moody’s Investors Service on Wednesday said it has
lowered its rating on Japanese government debt to Aa3 from Aa2, but the
outlook is now stable.
The downgrade is due to “large budget deficits and the build-up in
Japanese government debt since the 2009 global recession,” said the U.S.
ratings agency.
“Several factors make it difficult for Japan to slow the growth of
debt-to-GDP.”
Over the past five years, frequent changes in administrations have
prevented the government from implementing long-term economic and fiscal
strategies into effective and durable policies, it noted.
Moody’s also said the March earthquake disaster has delayed Japan’s
recovery from the 2009 global recession and aggravated deflationary
conditions.
“Support for the stable outlook comes from the undiminished home
bias of Japanese investors and their preference for government bonds,
which allows the government’s fiscal deficits to be funded at the lowest
nominal rates globally,” it said.
“We believe that this funding cost advantage will be sustained by
considerable institutional and structural strengths, which will prevail
even with large budget deficits in 2011 and 2012.”
tokyo@marketnews.com
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