Japan Downgrade Risk Seen Rising as Default Swaps Climb
- Nation’s sovereign credit-default swaps rise to 15-month high
- Abe plans to use sales-tax hike to fund economic package
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Japan’s credit rating could be in the cross hairs after Prime Minister Shinzo Abe indicated the nation may abandon its goal of covering key expenditures through taxes.
The cost of insuring Japan’s government debt against default rose to a 15-month high on Tuesday, with policy uncertainty adding to concerns about tensions with North Korea. On Monday, Abe said he would dissolve parliament later this week and he’d pay for economic measures with funds from a consumption-tax increase originally intended to rein in the nation’s swollen debt.