JAPAN: Rating agency Standard & Poor's lowers outlook on Japanese sovereign debt to negative on cost of rebuilding after earthquake

Record ID: 463551

  • Title: JAPAN: Rating agency Standard & Poor's lowers outlook on Japanese sovereign debt to negative on cost of rebuilding after earthquake
  • Date: 28th April 2011
  • Summary: TOKYO, JAPAN (APRIL 27, 2011) (REUTERS) TOKYO STOCK EXCHANGE (TSE) WHERE TSE OFFICIALS MONITOR TRADING SCROLLING ELECTRONIC STOCK TICKER ELECTRONIC STOCK BOARD OPENING GRAPHIC ELECTRONIC STOCK BOARD SHOWING AFTER LUNCH TRADING OPENS AT 9682.21 UP 123.52 CHANGING TO 9684.83 UP 126.14 TSE AREA WITH OFFICIALS MONITORING TRADING VARIOUS OF TSE OFFICIALS MONITORING TRADING GAITAME.COM OFFICES WITH STAFF SITTING BELOW MONITOR SHOWING YEN/DOLLAR RATE AT 81.616 STAFF MOVING MOUSE MAN SITTING IN FRONT OF MONITOR SHOWING YEN/DOLLAR RATE AT 81.612 STAFF WORKING MAN WORKING U.S. AND JAPANESE FLAGS IN FRONT OF MONITOR SHOWING YEN/DOLLAR RATE AT 81.581
  • Embargoed: 13th May 2011 13:00
  • Keywords:
  • Location: Japan, Japan
  • Country: Japan
  • Topics: Finance
  • Reuters ID: LVADTC5FHKXS5SJ6WFUCG7SSTKS7
  • Story Text: Rating agency Standard and Poor's threatened to cut Japan's sovereign debt rating on Wednesday (April 27) over quake costs although Japan said they would continue to work to maintain trust in Japanese debt.
    S&P affirmed its long-term rating on Japan at AA minus, but cut the outlook from stable to negative.
    The credit rating agency, which had cut Japan's rating in January for the first time since 2002, said costs related to the March 11 earthquake, tsunami and ensuing nuclear power plant crisis will increase Tokyo's fiscal deficit above prior estimates by a cumulative 3.7 percent of GDP through 2013.
    Japanese Chief Cabinet Secretary Yukio Edano said that the government would work to maintain trust in government bonds even with the expected costs incurred in the rebuilding process.
    "While we are still in a situation where there are many things that still need to be dealt with, we have consistently worked since the disaster to maintain trust in Japanese Government bonds. We plan on also working to maintain trust in Japanese bonds going forward as well," Edano said.
    The yen dipped shortly after the announcement with the dollar climbing to an intraday high of 81.781 yen, with the Nikkei 225 average holding gains.
    In an early sign of the impact the quake has had on private consumption, which makes up more than half of Japan's economy, nationwide retail sales fell in March at the fastest annual pace since 1998, data showed on Wednesday (April 27).
    The data, the first measure of consumption since the disaster, highlights the need for the government to quickly resolve the nuclear crisis, ensure power supply and help manufacturers restore damaged supply chains so they can produce more goods.
    Japan is expected to pass an initial 4 trillion yen ($49 billion) extra budget for disaster relief in early May that won't entail fresh borrowing, but that is just a downpayment on the expected cost of rebuilding in Japan's northeast.
    Further spending is likely to be financed by some combination of fresh borrowing and taxes, but the debate on the mix has barely begun.
    Standard & Poor's cut Japan's credit rating on Jan. 27 for the first time since 2002, saying Tokyo had no plan to deal with its mounting debt.
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