Japan’s sovereign-rating outlook was cut to “negative”!!

Japan’s sovereign-rating outlook was cut to “negative” by Standard & Poor’s as the nation’s reconstruction needs following last month’s earthquake will likely add to what’s already the world’s biggest debt load.
The outlook on Japan’s local-currency government debt rating, at AA-, the fourth-highest grade, was lowered from “stable,” S&P said in a statement today. The company had reduced the rating by one step in January in the first cut since 2002.
Japan’s struggle to rein in budget deficits will escalate as Prime Minister Naoto Kan enacts reconstruction packages in the aftermath of the March 11 earthquake and tsunami. At the same time, government revenue will be pressured by the economic hit, with a report today showing that retail sales in the nation tumbled the most in 13 years last month.
The fiscal outlook will depend on political leadership to manage Japan’s debt challenge, S&P said in its statement today. The company predicted that rebuilding will cost 20 trillion yen ($245 billion) to 50 trillion yen.
Chief Cabinet Secretary Yukio Edano declined to comment on the move, speaking to reporters in Tokyo. He said that policy makers will work to ensure confidence in government bonds. The yen fell after the announcement, trading at 81.73 per dollar at 11:21 a.m. local time, from 81.55 late yesterday in New York.

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