Japan Says Moodys Rating Explanation Insufficient

["Ulhas Joglekar" <joglekarulhas@xxxxxxxxxxx>]

The Financial Express

Friday, May 24, 2002

Japan Says Moody's Rating Explanation Insufficient

Tokyo, May 23:  Japan's ministry of finance kept up its campaign against
ratings agencies on Thursday, saying an explanation by Moody's Investors
Service on the default risk of Japan's debt lacked specifics and was
insufficient.
Moody's had told the ministry that Japan faced the possibility of having to
reschedule its public debt but the ministry said it replied that such a view
was unrealistic.
The agency was responding to a formal letter of complaint the ministry had
also sent to rival agencies Standard and Poor's (S&P) and Fitch in April
after suffering three downgrades in six months.
Moody's has said it would likely to conclude its Japan rating review by May
31 and is expected to announce a one- or two-notch downgrade to Japan's Aa3
local currency rating.
"How are the following factors considered in your analysis?" the ministry
said in a statement summarising its response.
"Currently, 95 per cent of Japanese government bonds (JGBs) is funded
domestically at low interest rates. "In addition, while the deficit of the
general government was 32 trillion yen, the excess savings of the private
sector stood at 42 trillion yen in 2001," it said, adding Japan's current
account surplus was high and the risk of capital flight small.
In a similar response, the ministry told Fitch its explanations on Japan's
default risk were short on specifics.
Earlier in the day, top financial diplomat Haruhiko Kuroda said he had sent
another letter to Moody's and Fitch questioning their responses to the
ministry's queries over Japan's credit rating.
The ministry also said it received a response on Thursday from S&P to its
letter questioning the agency's ratings of JGBs.
A spokesman at S&P said the agency had submitted the response to the
ministry, but declined to comment on what it said
- Reuters

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