A G8 nation with a poor rating? It is the same rating as Botswana and it still continues to belong to the club of G8? Is this a exclusive club or what? Didn't the G8 recently say that they are going to help Africa? How could they? Is it all talk?
Japan turns on Moody's as rating slides
Heather Stewart
Friday May 10, 2002
The Guardian
The Japanese finance ministry is fighting a rearguard action against western ratings agencies to prevent its sovereign debt being downgraded to the same status as Botswana's.
Ratings agency Moody's is expected to cut Japanese government bonds to single-A grade as early as next week -
putting the world's second-largest economy on a level with Hungary, Malaysia and Botswana - despite the finance ministry taking the unusual step of entering into a public row about previous downgrades.
Officials last month sent an angry letter to the three big agencies, Moody's, Standard & Poor's and Fitch, protesting at three reductions in Japan's credit rating in six months. The ministry of finance argued that Japan's special role as an international creditor and its large current account surplus justified a higher grade.
But analysts yesterday said the criticisms were unlikely to alter Moody's decision. "I can't imagine the ministry of finance's case would change Moody's mind at this late stage, it's just not strong enough," said Matthew Poggi, an economist at Lehman Brothers.
Fitch yesterday joined the public row with the Japanese government, issuing a robust defence of its decision to
downgrade Japanese debt last November. "Progress on structural reforms has, on our judgment, been slow," it said. "In the absence of greater policy urgency and evidence that deflationary pressures are easing, fiscal solvency will further deteriorate and Japan's sovereign credit rating will continue to fall."
Brian Coulton, Fitch's leading London-based analyst of Japan, warned that the reformist government of prime minister Junichiro Koizumi would have to take radical action to clean up Japan's debt-burdened banking sector before the confidence of foreign investors could be restored - even if that meant increasing debt in the short term.
Toshiro Mutoh, Japanese vice finance minister, shrugged off the arguments yesterday. "I don't think there was anything new. I think there is a need for more objective debate." |
