Latest news with #sovereign debt
Reuters
22-07-2025
- Business
- Reuters
Moody's says sales tax cut impact on Japan's rating will depend on scope, permanence
TOKYO, July 22 (Reuters) - Moody's Ratings said on Tuesday the potential impact of a cut to Japan's consumption taxes on the country's sovereign debt rating will depend on the "scope, magnitude and permanence." Prime Minister Shigeru Ishiba's ruling coalition lost its majority in upper house elections on Sunday, heightening the chance it may heed opposition calls for bigger spending and possibly cuts to Japan's consumption tax rate of 10%, except for food items at 8%. With the ruling coalition now required to seek the cooperation of opposition parties to pass legislation through parliament, prospects for fiscal expansion will heighten, said Christian de Guzman, senior vice president and manager at Moody's Ratings. But the ruling coalition's position remains "sufficiently strong" to preempt significant changes to the consumption tax rates, he said in a statement on Tuesday. "The potential credit impact of a lowering of consumption taxes will depend on their scope, magnitude and permanence," he added. Moody's has rated Japan A1, the fifth-highest level, with a "stable" outlook since December 2014. But it warned in a report in May that it may downgrade the rating "if prospects increase of a material and sustained widening in fiscal deficits leading to a significant deterioration" in Japan's already high debt burden. Japanese government bond (JGB) yields rose prior to the election on concerns a loss by fiscal hawk Ishiba's ruling party could heighten the chance of big spending and cuts to Japan's consumption tax. Before the election, Ishiba shunned calls to slash the consumption tax, which funds social welfare costs for a rapidly ageing population. He reiterated his caution over the idea after the election, telling reporters on Monday that cutting the tax could temporarily increase household income, but would raise questions on how to pay for Japan's ballooning social welfare costs. The Bank of Japan's efforts to roll back its massive stimulus also increase the cost of funding Japan's debt burden, which is the highest in the developed world at 250% of GDP. A credit rating downgrade to Japan's sovereign debt could trigger a sell-off of bonds, yen and Japanese stocks, and boost the cost of dollar funding for domestic banks, analysts say.
Irish Times
16-07-2025
- Business
- Irish Times
State divests holdings in Israeli bonds, says Paschal Donohoe
The State has divested its holdings in Israeli bonds 'in the past number of weeks', Minister for Finance Paschal Donohoe has confirmed. He said the Irish Strategic Investment Fund (Isif) had €3.62 million invested in Israeli sovereign debt last year and 'escalating geopolitical tensions and conflict' in the Middle East posed an 'increased risk to assets with economic exposure to the region. 'And Isif's view is that following the escalation of the Israel-Iran conflict in June of 2025, the current situation carried materially greater risk.' It determined 'the risk profile of a number of sovereign bond holdings in the region were no longer within its investment parameters. READ MORE [ Some of Iran's enriched uranium survived attacks, Israeli official says Opens in new window ] 'And following this determination, Isif divested its holdings, a sovereign debt issued by Jordan, Egypt and Israel.' The National Treasury Management Agency (NTMA) manages the fund which makes commercial investments for the benefit of the Irish economy. Speaking during finance questions in the Dáil late on Tuesday night Mr Donohoe said 'ISIF has complete independence in implementing its investment strategy' through an investment committee reporting to the NTMA's Board. Sinn Féin finance spokesman Pearse Doherty said it was 'absolutely outrageous' that Isif invested in Israeli war bonds. He asked the Minister if he knew that 'Irish taxpayers' money was funding a genocide'. Mr Doherty said 'Israel doesn't hide behind this. They do not blush about this. They sell these bonds and advertise these bonds as 'support the war effort'. But we all know that it's not a war. We know it's genocide,' and 'it appears the investment increased during 2024, when it was at full tilt'. [ Gaza: More than 700 killed by Israeli army while collecting water since war began, say authorities Opens in new window ] The Minister replied that 'the key point to emphasise is that Isif made the decision to divest of these bonds, they're no longer hold them, and I understand this decision was made over the last number of weeks'. Mr Doherty said the State invested money 'and you can't wash your hands of this. You're the bloody Minister for Finance, and an organisation that falls under the remit of the department is investing in genocide, no ifs, no buts, no maybes.' Mr Donohoe said 'Isif independently decides what shares they are going to hold, what investments they're going to make, and they do so in a way that is completely independent of me'. He wanted to 'thoroughly refute any suggestion of complicity in the appalling violence that has been inflicted upon the people of Israel. I want to again make clear, my condemnation of what is happening, as the Government already has on many different occasions'. Mr Donohoe said 'these bonds are no longer owned by ISIF and they were sold'. Independent TD Catherine Connolly said she had received a parliamentary reply that Isif had €2.62 million in 2023 and 'as the genocide continued, worsened, this State invests more money in the bonds'. Mr Donohoe said 'I do not play a role in determining the investment decisions that Isif make'. These decisions are made 'independently of me', he said.
