Corporate Japan's Downward Spiral Continues Unabated

Deterioration in the creditworthiness of Japanese corporations and financial institutions continued unabated in the first quarter of 2009, with rating downgrades outnumbering upgrades by a whopping 24-to-1.

Worse, Standard and Poor’s Credit Research said there is little to suggest any turnaround in the near future:

Given the uncertain prospects facing Japanese and global economies, we believe that the downward trend in the credit quality of Japanese corporations and financial institutions may continue for some time.

Japan’s corporations were on an upswing from 2004 until mid-2008. In the third quarter of 2008, credit conditions began deteriorating and have been on a downward slide since, S&P said.

S&P downgraded 10 Japanese in the first quarter, while none were upgraded. An additional 14 corporations saw their outlooks slashed to negative.

In “Weakening of Credit Quality Among Japanese Corporate and Financial Institutions More Pronounced in Q1 2009,” S&P details its downgrades of 14 banks, insurance and securities firms, and its move to a negative outlook on 12 others.

Comments

[Lee Eugene Munson]

A bit of the old closing of the barn door after the horse left going on here. However, in my last post the long term issue of culture and population issues create a situation with little upside.

2009 Apr 21 02:45 PM

[Mad Hedge Fund Trader]

The worst is yet to come. Japan will soon hit its bond market with a near record $110 billion of new paper to finance its emergency economic stimulus program. Anticipation of the program has already pushed yields on the JGB to 1.46%, a high for the year, up from 1.21% in January. With short term interest rates at zero and the world’s lowest long bond yields, there is little doubt the government will pull this off, according to Sean Maloney, interest rate strategist at Nomura Securities. Nearly twenty years of weak domestic growth and a decently growing money supply have created a structural oversupply of capital in Japan, an endless cash glut, and a shortage of high grade, low risk investments. The bigger question is whether this splurge will make any difference. After building 1,000 “bridges to nowhere” during the nineties to cope with a “lost decade”, no country has more conclusively proven the futility of government stimulus spending on public works than Japan. Is Obama about to make the same mistakes in the US?

2009 Apr 21 05:16 PM

[notsosmart]

they have a huge population problem.it will hurt their economy.

2009 Apr 22 11:57 AM