Moody's upgrades rating on Japanese gov't bond to Aa2+

TOKYO, May 18 Kyodo -
Moody's Investors Service said Monday it has raised the rating on
yen-denominated Japanese government bonds up a notch to Aa2 from Aa3, saying
the rating outlook is ''stable.''

The agency, meanwhile, lowered its rating for foreign currency-denominated JGBs
from the highest grade of Aaa to Aa2, and added that it will review the Aaa and
Aa1 ratings on bonds issued by Japan's state-linked institutions and regional
governments for possible downgrading.
Moody's said the moves are aimed at unifying ratings on various Japanese bonds
to reflect overall creditworthiness.
The U.S. credit-rating agency raised the rating for JGBs, following their
upgrade last June.
While the rating for JGBs had been the lowest among the Group of Seven major
developed countries, the latest upgrade brings it to the same level as that for
Italy.
The latest rating, the third-highest grade, reflects ''Japan's considerable
strengths,'' Moody's said in a statement, referring to factors such as the
nation's large domestic savings and its $1 trillion of official foreign
exchange holdings.
As for Japan's planned record level of bond issuance this year to fund the
government's economic stimulus program, Moody's said it ''believes the domestic
market will absorb'' the issuance.
But the rating agency also noted that Japan's ''high level'' of debt ''leaves
the country's fiscal position vulnerable to shocks or imbalances that would
cause a sharp rise in interest rates.''
==Kyodo