Japan's A1 issuer ratings affirmed by Moody's; outlook remains stable

[Tokyo, Japan skyline with the Tokyo Tower]
CHUNYIP WONG

Moody's Ratings affirmed the government of Japan's long-term local- and foreign currency issuer ratings and the local-currency senior unsecured ratings at A1, the ratings company said on Monday. The outlook remains stable.

A1 is Moody's fifth-highest of the firm's 10 investment-grade ratings levels.

The rating action "reflects traction on reflation and fiscal policy geared towards consolidation that together have facilitated a narrowing of the general government deficit," the company said. "The consequent normalization of monetary policy will be sustained at a pace that preserves strong – albeit weakening - debt affordability relative to peers."

In addition, the A1 rating and stable outlook also incorporates Moody's expectations of a slow decline in Japan's debt burden, though it will still remain high at above 200% of GDP through this decade, Moody's said. [https://www.moodys.com/research/Moodys-Ratings-affirms-Japans-A1-ratings-maintains-stable-outlook-Rating-Action--PR_512033?cid=GAR9PTU7VKT2671&emailToken=eyJ0eXAiOiJKV1QiLCJhbGciOiJIUzI1NiJ9.eyJVc2VySWQiOiJkNTVhNjMyZS1hMTUwLTRjNWQtYTRmYy05ZjlmMzA1OGMxMDAiLCJEb2NJZCI6IlBSXzUxMjAzMyIsImNyZWF0aW9uRGF0ZSI6IjIwMjUtMTAtMjdUMDY6MzU6MDcuNzQ4MzM2Mi0wNDowMCIsImV4cCI6MTc2MTgyMDUwNywiVXNlck5hbWUiOiJla2llc2NoZUBzZWVraW5nYWxwaGEuY29tIiwiVXNlclR5cGUiOiIyIn0.N8fp90dyXb_FQLrM55R3R-0oo6aKwOG4-gVk0rxm0gI]

The rating also includes the expectation that resilient domestic demand will help to buffer the deterioration of the global trading environment sparked by the shift in U.S. trade policy.

Japan's local- and foreign-currency country ceilings remain unchanged at Aaa, which is Moody's highest credit rating.

Relevant tickers: iShares MSCI Japan ETF (NYSEARCA:EWJ [https://seekingalpha.com/symbol/EWJ]), WisdomTree Japan Hedged Equity Fund ETF (NYSEARCA:DXJ [https://seekingalpha.com/symbol/DXJ]), First Trust Japan AlphaDEX Fund ETF (NASDAQ:FJP [https://seekingalpha.com/symbol/FJP]), Invesco CurrencyShares Japanese Yen Trust ETF (NYSEARCA:FXY [https://seekingalpha.com/symbol/FXY]).

DEAR READERS: We recognize that politics often intersects with the financial news of the day, so we invite you to click here to join the separate political discussion. [https://seekingalpha.com/article/4831693-politics-and-the-markets-102725]

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