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Biz Asia

Takahira Ogawa of Standard & Poor's Discusses Lowering Japanese Long-Term Credit Ratings

Aired September 11, 2001 - 08:32   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
DALTON TANONAKA, CNN ANCHOR: Japan took another blow when the Standard & Poor's ratings agency lowered its outlook on the country's long- term credit ratings to negative, from stable. This is what S&P blames for the revision: diminished prospects for timely structural reform, against a background of ineffective macroeconomic policies. The yen weakened in Asian trading on this day, closing at 121.64 to the dollar.

S&P's move comes on the eve of a meeting between Prime Minister Junichiro Koizumi and economic advisers, to hammer out deregulation and job measures.

For more on the S&P story, we are joined by Takahira Ogawa. He is director of S&P's sovereign rating team in Singapore.

Ogawa, when you say diminished prospects for timely structural reform, what time frame are you using?

TAKAHIRA OGAWA, ASIA-PACIFIC DIRECTOR, STANDARD & POOR'S: I heard the time frame is in the horizon of one year, since the start of the Koizumi government was established. We are already halfway through, but at the moment, we don't know for sure exactly what the government is trying to did.

TANONAKA: What exactly are your main concerns?

OGAWA: At the moment, because of the negative environment domestically, perhaps the government has to think about a fiscal boost. Of course, the size and the quality of the fiscal boost could be different from the previous months, but on the other hand, those negative environments of the macroeconomy could delay the necessary structure reform, as there was fiscal conservation.

TANONAKA: The problems remain the same: heavy debt loads, letting companies that need to fail?

OGAWA: I think so, because it's better for the nonviable company to be regulated and then be transferred to the potential buyer.

TANONAKA: Doesn't Mr. Koizumi's announcement -- tensions for reform - - make any difference when you do a downgrade over the outlook like this?

OGAWA: It could be, but we hope that government will continue with the structural reform. It will be helpful.

TANONAKA: Takahira Ogawa, Standard & Poor's in Singapore, thank you for that.

END

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