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Abe Doomsday Risk Prompts Moody’s Warning on JGBs: Japan Credit

Moody’s Investors Service says Japan’s biggest banks need to cut bond holdings and boost loans to protect their balance sheets from potential losses should Prime Minister Shinzo Abe’s stimulus spur yield surges.

Lenders’ stockpiles of sovereign debt were at 138.9 trillion yen ($1.36 trillion) in November, after peaking at a record 171 trillion yen in March 2012, Bank of Japan data show. Unprecedented buying of JGBs by the BOJ is allowing lenders such as Sumitomo Mitsui Financial Group Inc. to decrease holdings of the securities, while the world’s lowest interest rates constrain profits in lending.