S&P Cuts Outlook to Negative on Multiple Japanese Banks, Insurers, Power Companies on Sovereign Revision
Research Recap submits:
Standard & Poor’s has revised the outlook to negative for a number of Japanese banks, insurers and power companies, plus several public institutions and local governments after it revised the country’s sovereign rating outlook to negative.
- Standard & Poor’s expects costs related to the March 11, 2011, earthquake, tsunami, and nuclear power plant disaster will increase Japan’s fiscal deficits above prior estimates by a cumulative 3.7% of GDP through 2013.
- We revised the outlook on the long-term rating on Japan to negative to reflect the potential for a downgrade if fiscal deterioration materially exceeds these estimates in the absence of greater fiscal consolidation.
- We affirmed our long- and short-term sovereign credit ratings on Japan at ‘AA-’ and ‘A-1+’, respectively.
The negative outlook signals that a downgrade is possible if Japan’s public finances weaken further over the next two years in the absence of fiscal consolidation to offset them. We believeComplete Story »