Fitch cuts Japan credit rating outlook to negative

(Reuters) – Ratings agency Fitch on Friday cut its outlook on Japan’s sovereign debt, warning that the vast cost of a March earthquake and tsunami and the still-unknown bill for the clean-up after the nuclear disaster would further strain the country’s already shaky public finances.

The Fitch move means all three major ratings agencies now have their fingers poised on the trigger to downgrade Japan’s credit status unless they see moves by the government to strengthen the country’s finances.

Fitch cut its outlook to negative from stable and affirmed its AA minus local currency rating, its fourth highest and the same level as S&P’s but one notch below Moody’s Aa2.

“A stronger fiscal consolidation strategy is necessary to buffer the sustainability of the public finances against the adverse structural trend of population aging,” Andrew Colquhoun, head of Fitch’s Asia-Pacific Sovereigns team, said in a statement.

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