Standard and Poor’s (S&P) said Japanese Prime Minister Yoshihiko Noda’s administration has not made progress in tackling the public debt burden, an indication the ratings agency could be preparing to lower the nation’s sovereign grade.
“Japan’s finances are getting worse and worse every day, every second,” Takahira Ogawa director of sovereign ratings at S&P in Singapore, said in an interview. Asked if that means he is closer to cutting Japan, he said it “may be right in saying that we’re closer to a downgrade, but the deterioration has been gradual so far, and it’s not like we’re going to move today.”
A reduction in S&P’s “AA-” rating would be a setback for Noda, who took office in September and has pledged to both steady Japan’s finances and implement reconstruction from the earthquake and tsunami in March. It is unrealistic for Japan to think it can escape the debt woes that have engulfed other nations unless it can control its finances, Ogawa said.
While Japan has enjoyed borrowing costs at global lows for its debt, the IMF said in a report released on its Web site on Wednesday that there is a risk of a “sudden spike” in yields that could make the debt level unsustainable.
S&P has had Japan on a negative outlook since April. Ogawa said the nation needs a “comprehensive approach” to containing its debt burden, which the government projects will exceed ￥1 quadrillion (US$13 trillion) in the year through March as the nation pays for reconstruction.
The yen pared gains after Ogawa’s remarks and was trading at ￥77.15 against the US dollar as of 3:23pm in Tokyo yesterday. Yields on Japan’s benchmark 10-year government bond rose to as high as 0.98 percent yesterday from the previous close of 0.965 percent, before the nation’s markets shut on Wednesday for a holiday. The Nikkei 225 Stock Average dropped 1.8 percent to 8,165.18, its lowest close since March 2009.
“The events in Europe show us that when you lose market confidence at some point, the situation deteriorates fast,” Ogawa said. “Politicians need to act with the understanding that they are running out of time” to fix the nation’s finances. “If you don’t act early, it will become even more difficult” to maintain market trust, he said.
Japan’s lower house of parliament yesterday approved legislation that would add an additional 2.1 percent levy to an individual’s annual payment. Lawmakers revised the government’s proposal to extend the period of the measure from 10 years to 25 years, to help pay for reconstruction. The measure will take effect in 2013.
“Just because this passes does not mean that it’s positive for the public finances,” Ogawa said. “Politicians are squabbling over the minute details, while avoiding what’s most important.”
While Japan’s policymakers have signaled they will double the nation’s sales tax from 5 percent by about 2015, a bill has yet to be enacted.
Moody’s Investors Service cut the nation’s debt rating by one step to “Aa3” on Aug. 24. S&P lowered Japan to “AA-” in January and Fitch Ratings also has Japan at “AA-,” with a negative outlook.
Zhang Yazhou was sitting in the passenger seat of her Tesla Model 3 when she said she heard her father’s panicked voice: The brakes do not work. Approaching a red light, her father swerved around two cars before plowing into a sport utility vehicle and a sedan, and crashing into a large concrete barrier. Stunned, Zhang gazed at the deflating airbag in front of her. She could never have imagined what was to come: Tesla Inc sued her for defamation for complaining publicly about the vehicles brakes — and won. A Chinese court ordered Zhang to pay more than US$23,000 in
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday said that its investment plan in Arizona is going according to schedule, following a local media report claiming that the company is planning to break ground on its third wafer fab in the US in June. In a statement, TSMC said it does not comment on market speculation, but that its investments in Arizona are proceeding well. TSMC is investing more than US$65 billion in Arizona to build three advanced wafer fabs. The first one has started production using the 4-nanometer (nm) process, while the second one would start mass production using the
A TAIWAN DEAL: TSMC is in early talks to fully operate Intel’s US semiconductor factories in a deal first raised by Trump officials, but Intel’s interest is uncertain Broadcom Inc has had informal talks with its advisers about making a bid for Intel Corp’s chip-design and marketing business, the Wall Street Journal reported, citing people familiar with the matter. Nothing has been submitted to Intel and Broadcom could decide not to pursue a deal, according to the Journal. Bloomberg News earlier reported that Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is in early talks for a controlling stake in Intel’s factories at the request of officials at US President Donald Trump’s administration, as the president looks to boost US manufacturing and maintain the country’s leadership in critical technologies. Trump officials raised the
From George Clooney to LeBron James, celebrities in the US have cashed in on tequila’s soaring popularity, but in Mexico, producers of the agave plant used to make the country’s most famous liquor are nursing a nasty hangover. Instead of bringing a long period of prosperity for farmers of the spiky succulent, the tequila boom has created a supply glut that sent agave prices slumping. Mexican tequila exports surged from 224 million liters in 2018 to a record 402 million last year, according to the Tequila Regulatory Council, which oversees qualification for the internationally recognized denomination of origin label. The US, Germany, Spain,
RSS