S&P shifts Japan’s credit rating outlook to negative
JAPAN’S sovereign credit rating received a downgrade threat from US agency Standard & Poor’s yesterday on concern that the cost of the devastating earthquake and tsunami in March will damage its public finances.
S&P lowered the outlook on Japan’s long-term rating to negative from stable, meaning a downgrade of its sovereign rating is possible if conditions do not improve.
S&P kept Japan’s long and short term ratings at AA- and A-1+ respectively but warned that the bill from the nuclear crisis and two disasters could reach 50 trillion yen (£371bn).
Without tax increases S&P said Japan’s government would bear virtually all the costs, pushing its 2011 budget deficit up by two per cent and raising the net debt to 145 per cent of GDP in 2013.