S&P Cuts Outlook to Negative on Multiple Japanese Banks, Insurers, Power Companies on Sovereign Revision

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 believe that uncertainty over the country’s fiscal and economic outlook will lessen over the next six to 24 months.

If the government’s debt trajectory remains on its current course or begins to erode the nation’s external position, the long- and short-term ratings could be lowered.

If reconstruction costs place less burden on public finances than we expect–either because of lower outlays or increased revenues to cover them–and the government makes progress in strengthening Japan’s fiscal profile, we could revise the outlook back to stable.

For details see Research Update: Outlook On Japan Sovereign Credit Rating Revised To Negative; Ratings Affirmed At ‘AA-/A-1+’

See also:

Outlooks Revised To Negative On Six Japanese Public Institutions

S&P revised to negative from stable the outlooks on the long-term issuer credit ratings on Japan Finance Corp. (JFC), Japan International Cooperation Agency (JICA), Japan Expressway Holding and Debt Repayment Agency (JEHDRA), Japan Housing Finance Agency (JHF), Japan Finance Organization for Municipalities (JFM), and Narita International Airport (NAA).

Outlooks On Three Japanese Local And Regional Governments Revised To Negative

Outlooks On Japan’s Okinawa EPCO, Tokyo Gas, And Osaka Gas Revised To Negative

Outlooks On Shizuoka Bank And Seven Bank To Negative; JPMorgan Securities Affirmed

Outlook On Japan’s Deposit Insurance Corp. Revised To Negative

Outlooks On Eight Japanese Insurers Revised To Negative

Technorati Tags: insurers, japan, Japan earthquake, Japanese banks, JPMorgan, Okinawa EPCO, Osaka Gas, Seven Bank, Shizuoka Bank, Tokyo Gas

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Wednesday, April 27th, 2011 : Credit Research, Equity Research : 2 Comments

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