S&P Sees Drop in Credit Quality of Japanese Firms

The credit quality of Japanese companies may deteriorate if the country struggles to recover from last Friday's massive 9.0-magnitude earthquake and tsunami, says Standard and Poor's.

 

Japanese manufacturers that supply auto parts and electronic components are especially vulnerable because they have factories in the areas hit by the earthquake, Standard and Poor's said.

 

"Credit quality could still deteriorate for companies that escaped direct earthquake damage if electricity shortages and other challenges are prolonged," says the ratings agency in a statement.

 

Any delay in the recovery from the earthquake would affect the recovering trend of Japanese manufacturers' earnings. "As a result, Standard and Poor's believes the negative effects on economic activities and individual companies' financial performances may grow," says the statement.

 

 

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