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Moody’s Investors Service Inc. on Tuesday took rating action against two of Japan’s giant trading houses, Itochu Corp. and Marubeni Corp., in a move that could cut their credit ratings.

The U.S. credit rating agency placed Itochu’s Ba3 rating and senior unsecured debt rating under review.

“The rating action reflects Moody’s concerns over Itochu’s long-term franchise under pressure and the firm’s thin economic capitalization, which remains susceptible to adverse external developments,” it said.

Moody’s also changed Marubeni’s rating outlook to negative from stable, citing concerns that the adverse operating environment may hurt Marubeni’s long-term franchise.

Moody’s said the short- to medium-term effects of Marubeni’s reorganization efforts may not be sufficient to respond to harsh competition and rising financial pressure.

“Structural changes within Japan’s capital market, including regulatory developments surrounding banks, may affect Marubeni’s funding condition over time, and it may result in higher funding costs,” Moody’s added.

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