Fitch downgrades Japan credit rating two notches
TOKYO - Agence France-PresseFitch cut Japan’s credit rating by two notches yesterday, citing the country’s massive public debt, as Tokyo struggles to set the world’s third-largest economy back on a growth track.
The international agency downgraded its long-term foreign currency rating to ‘A+’ from ‘AA’, with a negative outlook, saying it reflected “growing risks for Japan’s sovereign credit profile as a result of high and rising public debt ratios.” Japan has an eye-watering national debt that amounts to more than twice its gross domestic product, the highest among industrialised nations, a problem that would usually mean paying a high premium to borrow funds.
But its bonds are mostly held by domestic, long-term investors, meaning Japan pays low interest rates on its debt and is less vulnerable to howls of criticism from foreign buyers over the nation’s fiscal management -- a fate that has befallen Greece.
However, Fitch said the nation’s debt load is projected to hit 239 percent of output by the end of the year, “by far the highest for any Fitch-rated sovereign” debt.