Moody’s sees limited impact on Japan’s debt financing from BOJ rate hike

TOKYO: Any future interest rate hike by the Bank of Japan (BOJ) will likely be gradual and have a limited near-term impact on the country’s debt financing, an official at global ratings agency Moody’s Investors Service said on Friday.

While Japan’s huge public debt is negative for its credit profile, such weakness is offset by the country’s huge savings and domestic investors’ strong home bias, Moody’s Senior Vice President Christian de Guzman said.

“Our view on interest rates is that, in the event of a normalisation, the BOJ will only gradually increase rates and therefore the near-term impact on Japan’s debt finance will be limited,” de Guzman told Reuters in an interview.

“What’s important is the ability of the government to fund itself at very favorable interest rates. We don’t see this as necessarily having changed,” he said. “The government still has very comfortable funding situation.”