Credit rating agency Moody's Investors Service said Monday that its rating outlook for Japanese companies is generally positive on expectations that their credit quality will continue to improve for the time being.
"Signs of improving credit quality support a favourable rating outlook for the Japanese corporate sector," Moody's said in a report.
"The holes that existed in corporate balance sheets have largely been filled through restructurings, debt forgiveness and a highly supportive monetary policy," the rating agency said.
Moody's "expects credit quality - and credit ratings - to continue to improve as Japan regains its economic momentum and as companies reap the benefits of restructuring," the agency said.
Average earnings coverage of interest charges has increased four-fold to almost nine times from two times in 1995, according to a Moody's survey of the largest 1,000 companies listed on the first section of the Tokyo Stock Exchange.
Their operating profit margins have strengthened from under four percent to around 5.5 percent in the last two years, the survey showed.
"Moody's Japanese corporate ratings also reflect a supportive banking system that has played a crucial role in limiting corporate failures," the agency said.
"As a result of this support, default rates and bondholder losses have remained very low," it added.
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