Moody's Investors Service on Tuesday cut its outlook on Japan's sovereign debt to negative, warning that the nation must take substantive action to control its debt or it will be in for a ratings downgrade.
AFP reported that, while Moody's previously graded Japan as "stable" at Aa2, analysts believed that the change in outlook was a precursor to a downgrade. Standard & Poor's in January had cut Japan's credit rating for the first time since 2002, citing as the cause a lack of a coherent policy on the part of the government to address its debt.
In a statement, Moody's said, "The rating action was prompted by heightened concern that economic and fiscal policies may not prove strong enough to achieve the government's deficit reduction target and contain the inexorable rise in debt, which already is well above levels in other advanced economies."
