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Moody's cuts Japan rating one notch to Aa3
Source: Agencies |
August 24, 2011, Wednesday
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MOODY'S Investors Service cut its rating on Japan's government debt by one notch to Aa3 today, blaming large budget deficits and a buildup of debt since the 2009 global recession.
The ratings agency also warned that frequent changes in Japan's government have hampered its ability to tackle the problem of bulging debt as Tokyo prepares for its sixth leader in five years.
"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," Moody's said.
Unpopular Prime Minister Naoto Kan confirmed yesterday he would step down as head of the ruling party within the week.
Moody's had warned in May that it might downgrade Japan's Aa2 rating due to heightened concerns about its faltering growth prospects and a weak policy response to deal with bulging public debt, now twice the size of its US$5 trillion gross domestic product.
Analysts said the downgrade was hardly a surprise and the bond market reaction should be muted.
The ratings agency also warned that frequent changes in Japan's government have hampered its ability to tackle the problem of bulging debt as Tokyo prepares for its sixth leader in five years.
"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," Moody's said.
Unpopular Prime Minister Naoto Kan confirmed yesterday he would step down as head of the ruling party within the week.
Moody's had warned in May that it might downgrade Japan's Aa2 rating due to heightened concerns about its faltering growth prospects and a weak policy response to deal with bulging public debt, now twice the size of its US$5 trillion gross domestic product.
Analysts said the downgrade was hardly a surprise and the bond market reaction should be muted.
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