31 October 2001, 12:01 TOKYO, Oct. 31 (Kyodo) - The Japanese corporate sector is likely
OKYO, Oct. 31 (Kyodo) - The Japanese corporate sector is likely
to see a growing number of bankruptcy filings and other forms of
default, Standard & Poor's Corp. (S&P) said in a report released
Wednesday.
The report, "Japan CreditStats 2001," based on an annual
survey of corporate credit trends in Japan, highlights continuing
weakness among Japanese companies despite efforts to improve their
cost structures, the U.S. rating agency said.
"Deteriorating global economic conditions and a deflationary
domestic environment point to a gloomy outlook for corporate credit
quality in Japan," Daisuke Fukutomi, a director of corporate
ratings at S&P in Tokyo, said in the report.
The report said the recent failure of retailer Mycal Corp.
exemplifies the rising risk of defaults by major Japanese firms and
points to uncertainty over the reliability of support from main
creditor banks.
In addition to the prolonged economic downturn in Japan,
companies are feeling the effects of an economic slowdown in the
United States, it said.
"Moreover, key manufacturing industries in Japan still suffer
from excess capacity," the report said.
"While a number of companies have taken progressive measures to
improve their cost structure, most companies have only taken
limited steps to reduce excess capacity and address the problem of
high labor costs," it added.
Fukutomi said S&P will pay particular attention to the
high-tech, retail and construction sectors as areas for potential
negative rating actions over the next year.
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