Fitch Could Downgrade Japan After Elections

Fitch Ratings expects to downgrade Japan’s credit rating sometime early next year as the government is unlikely to compile a budget for next fiscal year that offsets a delay in increasing the sales tax, a senior official from the agency said on Thursday.

Andrew Colquhoun, head of Asia-Pacific sovereigns at Fitch, said in a conference call that Japan’s government is also planning to lower the corporate tax, which shows a decreasing chance of lowering the budget deficit.

Fitch is unlikely to consider a downgrade of more than one notch, he said.

Fitch’s rating on Japan is A plus, which is four notches below the top AAA rating. Fitch has Japan on ratings watch negative, meaning a downgrade is possible. Fitch has said it wants to resolve its negative outlook during the first half of next year.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza