Japan’s Debt Rating Put on Review for Downgrade by Moody’s

Japan’s sovereign rating was put on review for a downgrade by Moody’s Investors Service, raising the challenge for Prime Minister Naoto Kan to fund post-earthquake reconstruction while limiting the rise in long-term debt.

“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. The company put Japan’s Aa2 sovereign debt grade on negative outlook in February. Review for a downgrade means a decision within three months, according to Moody’s.