Moody’s puts Japan on outlook

Exactly how this catastrophe will effect Japan’s economy, or that of other global markets, remains unclear as cheap liquidity has begun to flood the system. Like everyone else, the credit rating agency seems to be playing things as they develop.

“No fiscal crisis is imminent in Japan after the earthquake. Debt markets are likely to fund government deficits at low cost, given Japan’s deep and liquid government debt market. However, a tipping point may be reached at some point if the market loses confidence in the soundness of government finances, and demands a risk premium on government bonds.”

They have been slightly more adventurous when discussing Japan’s largest and most decentralized organizations.

“While the situation in Japan remains uncertain and fluid following the March 11 earthquake and tsunami, at this point we do not believe there will be rating implications for most large Japanese corporates and banks. Most entities are broadly diversified and therefore do not demonstrate material concentration risks to the most affected prefectures.”