Toyota Motor Co, NTT DoCoMo Inc, Tokyo Electric Power Co and other Japanese companies may see their borrowing costs inflated as Japan's sovereign credit rating plunges, analysts said.
Standard & Poor's Corp gave Japan its third downgrade in 14 months yesterday, citing inadequate efforts to clean up bad loans and pull the world's second-largest economy from recession. While S&P reiterated the ratings of Toyota and other major companies, analysts say businesses will eventually pay a price as further sovereign rating cuts are likely.
After the cut, government debt is rated "AA-" by S&P, the same level as DoCoMo, Nippon Telegraph & Telephone Corp, Japan's largest phone companies, and three notches lower than Toyota.
Corporate debt, which rarely rises above the sovereign rating of a company's home country, may be dragged down by Japan's cut.
"The rating cut on the government bonds means Japan's national strength is weakening," said Tetsunori Hoshiko, a bond trader at Shinko Securities Co. "Japan's slowing economy and declining domestic sales may become the focus of rating reviews for those companies."
A round of downgrades would probably begin with quasi-public corporations and then utilities, Hoshiko said. Japan Highway Public Corp's long-term rating by S&P was cut one notch, to "A+," this morning. The company cited the highway operator's partial reliance on public support and said the corporation's credit quality was declining in line with that of the government.
S&P affirmed its ratings on DoCoMo, Toyota, NTT, Tokyo Electric and other major corporations, although it said its outlook for Japanese corporate credit quality "generally remains negative."
Like NTT and NTT DoCoMo, Tokyo Electric is rated "AA-" by S&P.
While Japan's largest utility sees no direct connection between the public sector's credibility and that of domestic companies, a rise in government bond yields would push up borrowing costs, said Tokyo Electric spokesman Toru Ueno. Past downgrades of the company's own debt, including a rating cut by Moody's in April 1999, had little impact, said another company spokesman, Motoyasu Tamaki.
The impact of today's S&P cut on business borrowers will be limited, perhaps affecting some highly rated corporations, said Motomitsu Honma, an economist at Mitsui Sumitomo Asset Management Co.
RETHINK? The defense ministry and Navy Command Headquarters could take over the indigenous submarine project and change its production timeline, a source said Admiral Huang Shu-kuang’s (黃曙光) resignation as head of the Indigenous Submarine Program and as a member of the National Security Council could affect the production of submarines, a source said yesterday. Huang in a statement last night said he had decided to resign due to national security concerns while expressing the hope that it would put a stop to political wrangling that only undermines the advancement of the nation’s defense capabilities. Taiwan People’s Party Legislator Vivian Huang (黃珊珊) yesterday said that the admiral, her older brother, felt it was time for him to step down and that he had completed what he
Taiwan has experienced its most significant improvement in the QS World University Rankings by Subject, data provided on Sunday by international higher education analyst Quacquarelli Symonds (QS) showed. Compared with last year’s edition of the rankings, which measure academic excellence and influence, Taiwanese universities made great improvements in the H Index metric, which evaluates research productivity and its impact, with a notable 30 percent increase overall, QS said. Taiwanese universities also made notable progress in the Citations per Paper metric, which measures the impact of research, achieving a 13 percent increase. Taiwanese universities gained 10 percent in Academic Reputation, but declined 18 percent
UNDER DISCUSSION: The combatant command would integrate fast attack boat and anti-ship missile groups to defend waters closest to the coastline, a source said The military could establish a new combatant command as early as 2026, which would be tasked with defending Taiwan’s territorial waters 24 nautical miles (44.4km) from the nation’s coastline, a source familiar with the matter said yesterday. The new command, which would fall under the Naval Command Headquarters, would be led by a vice admiral and integrate existing fast attack boat and anti-ship missile groups, along with the Naval Maritime Surveillance and Reconnaissance Command, said the source, who asked to remain anonymous. It could be launched by 2026, but details are being discussed and no final timetable has been announced, the source
CHINA REACTS: The patrol and reconnaissance plane ‘transited the Taiwan Strait in international airspace,’ the 7th Fleet said, while Taipei said it saw nothing unusual The US 7th Fleet yesterday said that a US Navy P-8A Poseidon flew through the Taiwan Strait, a day after US and Chinese defense heads held their first talks since November 2022 in an effort to reduce regional tensions. The patrol and reconnaissance plane “transited the Taiwan Strait in international airspace,” the 7th Fleet said in a news release. “By operating within the Taiwan Strait in accordance with international law, the United States upholds the navigational rights and freedoms of all nations.” In a separate statement, the Ministry of National Defense said that it monitored nearby waters and airspace as the aircraft