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> Thursday, Jan. 27, 2011
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> S&P cuts Japan's debt rating to AA-
> Bloomberg
> Japan's sovereign credit rating was cut for the first time in nine
> years on concern that Prime Minister Naoto Kan hasn't done enough to
> curb the $11 trillion debt burden.
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> The nation's debt is now ranked by S&P as AA-, the fourth-highest
> level and the same as China's. The reduction from AA was announced
> Thursday.
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> The move fuels concern that policymakers may struggle to finance a
> debt burden projected to swell to ¥943 trillion, or about twice the
> size of the nation's gross domestic product. Kan may need to speed
> up efforts to raise revenue by raising the consumption tax to
> prevent a debt crisis like that of Europe.
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> "I hope this serves as a warning for the government, they have
> absolutely no sense of crisis," said Azusa Kato, an economist at BNP
> Paribas in Tokyo. "Once bond yields spike and the fire is lit, the
> amount needed to finance Japan's borrowing needs is going to jump
> and it's going to be too late" to mend the country's finances, she
> said.
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> The cost of protecting against a default by the government rose.
> Credit-default swaps jumped 4 basis points to 84 basis points,
> according to Deutsche Bank AG, set for the biggest daily increase
> since Nov. 30, prices from data provider CMA show.
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> By putting Japan alongside China, the downgrade highlights the rise
> of the Chinese economy.
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