Standard & Poor's Corp. said Wednesday it has cut the credit ratings of major trading houses Marubeni Corp. and Mitsubishi Corp. but affirmed those of three other traders.
The U.S. credit-rating agency lowered the short-term rating on Marubeni from B to C, while cutting the long-term rating on Mitsubishi from A-minus to BBB-plus.
S&P has affirmed the short-term ratings on both Mitsui & Co. and Sumitomo Corp. at A-2, while leaving the short-term rating on Itochu Corp. at B.
This action reflects S&P's view that weak demand in the domestic economy, fragility within the banking sector and simmering deflation have combined to diminish the creditworthiness of Japan's trading houses.
"General trading houses are insufficiently capitalized with regard to the nature of the risks they take," the agency said.
Meanwhile, S&P analyst Takahiro Saimen said, "Their credit quality is also being pressured by an increasing strategic focus on long-term lending and investment activities, which is not being balanced by a commensurate buildup of their highly leveraged equity bases."