Moody's Cuts Japan's Sovereign Debt Rating Again

TOKYO -- Are Japanese investors in denial about their economy, or do they know something that's escaping Moody's Investors Service?

Tokyo's stock and bond markets both jumped higher Friday despite Moody's slashing Japan's sovereign debt rating to AA2 (its third-highest rating) from AA1. Citing problems with the high spending rate of the Japanese government to prop up the economy, Moody's also said the outlook for the rating remained negative. This is the second time the firm has cut Japan's rating in two years.

"The negative outlook (is) prompted by policy shortcomings and structural problems that have resulted in a level of government indebtedness that has become the highest, relative to gross domestic product, among the advanced industrial economies," Moody's analysts Vincent Truglia and Tom Bryne said in a statement. Most experts reckon Japan's debt ratio will be around 136% by the end of March 2001. ...