Moody's Puts Japanese Bond Ratings on Review for Possible Downgrade

Moody's Investors Service announced Tuesday it put Japan's bonds on review for possible downgrade, dealing another blow to an economy already devastated by turmoil since the March earthquake and tsunami. Citing long-term fiscal concerns, Moody's is re-evaluating its view on Japan's Aa2 local and foreign currency bond ratings. "The review has been prompted by heightened concern that faltering economic growth prospects and a weak policy response would make more challenging the government's ability to fashion and achieve a credible deficit reduction target," Moody's said in a statement. Japan's economy has struggled to move forward in recent years, and the earthquake was certainly a catalyst in recent analyst outlook downgrades. Further, according to a Reuters report, "Moody's voiced doubts the Japanese economy could grow fast enough to bring down fiscal deficits and warned political infighting could scupper tax and social security reforms needed to stabilise public finances." Japanese stocks shook off that report Tuesday, however, as an industrial and manufacturing survey showed renewed signs of rebounding. Tokyo's Nikkei Index is higher by 2%.