KBRA Affirms AA-/K1+ Ratings for Japan; Stable Outlook
30 Nov 2023 | New York
KBRA affirms Japan’s long-term issuer ratings of AA-. KBRA also affirms the short-term issuer ratings of K1+. The Outlook on the long-term ratings is Stable.
| This credit rating is an unsolicited credit rating | |
|---|---|
| With Rated Entity or Related Third-Party Participation | Yes |
| With Access to Internal Documents | Yes |
| With Access to Management | Yes |
KBRA’s affirmation of the ratings reflects Japan’s large, wealthy and institutionally advanced economy, external account strength, and strong access to liquidity. The ratings also consider the government’s large debt, as well as demographic, GDP growth and medium- to long-term deflation challenges. Although policy mix and global macro conditions (including Yen depreciation) have elevated inflation, Japan’s longstanding deflationary tendencies still persist. The current environment with inflation exceeding the Bank of Japan target may facilitate an exit from unorthodox monetary policy reliance that already started with relaxing Yield Curve Control. While likely to be managed, risk of a destabilizing exit exists.
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