Japan buying European debt despite downgrade

5 years ago by in Business

Japan has not lost its trust in European Union’s leading markets, despite the recent downgrade by a rating agency, and will continue to buy bonds from the EU as they represent “something that is worth holding”, according to finance minister Jun Azumi.

The rating of the European Financial Stability Facility (EFSF) bailout fund was downgraded one step by Standard&Poor’s rating agency on Monday, from AAA, the maximum level, to AA+, as two of the fund’s top guarantors, France and Austria, saw their respective ratings downgraded.

Japan is not looking at an immediate change of plans regarding the buying of European bonds.

“We have bought them as important products for stable management (of Japan’s foreign reserves), something that is worth holding, and there won’t be any immediate change in our thinking,” Azumi said.

Japan has bought EFSF bonds for about a year, since the fund was started.

The fund’s rating may be increased again by Standard&Poor’s, if its members can secure more funds. “The outlook is developing, which reflects that we could raise the EFSF’s long-term rating to AAA if we see that additional credit enhancements are put in place,” the agency said.