S&P Signals Japan Downgrade Approaching as Finances Worsen

[dkf]

Nov. 24 (Bloomberg) -- Standard and 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. 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.

http://www.businessweek.com/news/2011-11-24/s-p-signals-japan-downgrade-approaching-as-finances-worsen.html

[Owlet]

1. no surprise here

Kyle Bass has been saying this for weeks.

[dkf]

2. I only found him a few days ago but his explanations are so damned concise that it's hard to naysay.

[Rex]

3. Everyone remember to thank GWB for making this all possible.

If Al Gore would have been allowed the POTUS spot, Japan would only be dealing with damage from the weather.

[UTUSN]

4. Just me, but S&P can stick its downgrades where its S doesn't P, whatever that means!1 n/t