Japan Debt Outlook Cut to ‘Negative’ by S&P on Rebuilding Costs

[Viva_La_Revolution]

Source: Bloomberg

Japan’s sovereign-rating outlook was cut to “negative” by Standard & Poor’s as the nation’s reconstruction needs following last month’s earthquake will likely add to what’s already the world’s biggest debt load.

The outlook on Japan’s local-currency government debt rating, at AA-, the fourth-highest grade, was lowered from “stable,” S&P said in a statement today. The company had reduced the rating by one step in January in the first cut since 2002.

Japan’s struggle to rein in budget deficits will escalate as Prime Minister Naoto Kan enacts reconstruction packages in the aftermath of the March 11 earthquake and tsunami. At the same time, government revenue will be pressured by the economic hit, with a report today showing that retail sales in the nation tumbled the most in 13 years last month.

The fiscal outlook will depend on political leadership to manage Japan’s debt challenge, S&P said in its statement today. The company predicted that rebuilding will cost 20 trillion yen ($245 billion) to 50 trillion yen.

Read more: http://www.bloomberg.com/news/2011-04-27/japan-debt-outlook-cut-to-negative-by-s-p-as-quake-rebuilding-adds-to-debt.html

[sasha031]

1. screw S&P

[bossy22]

2. why?

for trying to do their jobs?

[DCKit]

3. You have got to be kidding.

S&P is just setting Japan up for a takedown by the IMF, World Bank and other foreign creditors.

It's what they do - all the third world countries in debt to both entities, the AAA ratings given to US derived mortgage-backed securities (while the sellers sold them short), Ireland, Spain, Greece, Portugal (PIGS), and their current threat to downgrade US treasuries.

Anyone who's stupid enough to fall for it after the track record S&P has built up, deserves whatever they get.

[cstanleytech]

4. My apologies but that seems to be a little tin foil hat like.

I am not in banking nor do I understand the whole thing on how it works but what I do know is that S&P did not cause the quake nor did they cause a nuclear meltdown to occur afterwards and it seems to me atleast that those kinds of things would tend to have a negative impact on a country and the rating that a group like S&P would give.

[DCKit]

5. And I believe that, due to the quake and Fukushima...

Japan is going to emerge stronger than ever and an icon of where we should be heading.

Unless the IMF, World Bank and other foreign creditors get their claws into them, first.

[cstanleytech]

6. I never said that I doubted that

they could recover as for the IMF *shrug* if you want to think the worst of them thats your prerogative but I personally have no opinion on them either negative or positive.

[Art_from_Ark]

8. Japan's got some economic clout

in the form of $700 billion+ in US Treasuries, and there are huge amounts of personal savings to boot, so I don't think the World Bank or IMF will try to take advantage of the disasters. However, I have a suspicion that the low rating is little more than an attempt to get some Japanese assets on the cheap.

"OMG! Did you hear? Retail sales in Japan were at a 13-year low last month! The sky is falling!"

[Art_from_Ark]

7. I agree-- this is bullshit

Last month would be March 2011-- the most horrible month for Japan in the post-war era. Tens of thousands of people killed, manufacturing in the east severely disrupted, towns wiped out, public infrastructure along the eastern coast heavily damaged, shortages of food, gasoline, and other daily items. There were even public service commercials on TV asking us here in Japan to LIMIT our buying during the worst part of the crisis. So yeah, retail sales are going to go down in a month like that. Sheesh!

And the AA- rating is bullshit too.