Thursday, August 25, 2011

Moody's down one notch the rating of the long-term debt of Japan

The rating agency Moody's announced on Wednesday, August 24, she dropped one notch to Aa3, the note of the long-term debt of Japan because of the massive debt the country, aggravated by the earthquake March 11 in the northeast. Japan is in debt to the tune of about twice its gross domestic product (GDP), and the burden grows each year through the issuance of treasury bills to fill much lower income to spending.

"The ratings downgrade is driven by large fiscal deficits and the accumulation of Japan's public debt since the global recession of 2009," Moody's said in a statement. And the agency added that "several factors make it difficult for Japan to reduce the proportion of debt vis-à-vis the GDP, thus lowering his score." This is the first time a major rating agency lowers rating of Japan since the disaster of March 11 coupled with a nuclear power plant in Fukushima.

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