RTTNews - Monday, the Moody's Investors Service said it unified the government of Japan's local and foreign currency bond ratings at Aa2. The rating agency raised its domestic currency bond rating from Aa3 and lowered its foreign currency bond rating from Aaa. The outlook for the government's ratings was stable.

Moody's assessed that the payment priorities of various governments proved very hard to predict. As a result, Moody's unified its ratings on various obligations at the level of its overall credit profile, which was Aa2.

Japan's foreign and domestic currency long-term bond ceilings and deposit ceilings remained unchanged at Aaa and its short-term ceilings remain at Prime-1. Also, the agency placed ratings of 26 Aaa-rated and Aa1-rated government-related issuers (GRIs), regional governments and local governments under review for possible downgrade.

Further, Moody's said the unified rating of Aa2 reflects Japan's considerable strengths. Moody's believed the domestic market would absorb the record level of bond issuance this year to fund the government's economic stimulus program. But, the rating also indicates the risks of Japan's high level of debt, which would leave the country's fiscal position vulnerable to shocks or imbalances that would cause a sharp rise in interest rates.

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