JAPAN: Moody’s Affirms Japans A1 Rating, Outlook Remains Stable

Friday December 8 2017

On 6^th December Moody’s Investors Service affirmed the Government of Japan’s A1 local and foreign currency issuer ratings and local currency senior unsecured rating. The rating outlook is maintained at stable.

This affirmation reflects the strengthened prospects of the broadly stable debt burden  which over the next few years is estimated to create further improvements in debt affordability. The rating is also influenced by increased growth rates in GDP growth. These factors support Moody’s assessment of the economy’s competitiveness and some effectiveness of government policies.

The ratings rationale is based on two main factors:

1. The debt burden will remain broadly stable in the next few years, albeit at very high levels, as the government pursues fiscal consolidation and the macroeconomic environment remains relatively favorable.
2. Over the long term, the ability of the government to continue to refinance its extraordinarily high debt burden at affordable costs will determine Japan’s credit profile. So far, the risks posed by that debt burden are mitigated by very low interest costs, which reflect the Japanese government’s ability to draw on the very large pool of domestic savings, in large part invested in government assets.

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