Moody’s downgrades Japan on debt concerns
Credit rating agency Moody’s has downgraded Japan’s sovereign debt rating by one notch, saying weak political leadership has hampered growth.
The downgrade came as the government unveiled a $100bn loans programme to help companies deal with a strong yen that threatens the economy, the Telegraph reports.
Moody’s reduced the rating on Japanese government bonds to Aa3 from Aa2 less than a week before Japan is to select a new prime minister to become the nation’s sixth leader in five years.
The agency said: “Over the past five years, frequent changes in administrations have prevented the government from implementing long-term economic and fiscal strategies into effective and durable policies.”
In May Moody’s warned it might downgrade Japan due to concerns about faltering growth prospects and a weak policy response to cutting its huge public debt, totaling 220% of GDP.
It pointed to the “large budget deficits and the build-up in Japanese government debt since the 2009 global recession” as another reason for the downgrade.
The Nikkei 225 index closed 1% or 93 points down at 8,639.