Japan had its rating cut to Aa3 from Aa2 by Moody’s Investors Service, which concluded a review started on May 31. The outlook on the rating is stable.
The downgrade was prompted by large budget deficits and the build-up in Japanese government debt since the 2009 global recession, Moody’s said. It is also difficult for Japan to slow the growth of debt in relation to gross domestic product, the ratings agency said.
The outlook remains stable because of the “undiminished home bias” of Japanese investors and their preference of government bonds, which allows the government’s fiscal deficits to be funded at the lowest nominal rates globally, Moody’s said in the statement.
Read the rest of the story: Japan Government Rating Cut to Aa3 by Moody’s on Deficit; Outlook Stable.