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Japan corporate credit quality slipped in '99-S&P

TOKYO: Japan's corporate credit quality deteriorated further in 1999 despite improvements in the economy, Standard & Poor's Corp said in a report on Wednesday.

S&P downgrades of Japanese companies have substantially outnumbered upgrades over the past two years, it said.

The ratings agency added that despite the economy moving towards recovery it does not expect the credit quality of Japanese companies to improve uniformly.

On the contrary, advances in information technology and progress in market deregulation will intensify competition, causing a greater divergence in credit quality across sectors, S&P said.

It cited competitive strengths at home and abroad, steady business performance, and a strong balance sheet as the keys to a successful recovery in credit quality for Japanese companies.

Companies that abandon the myth of perpetual growth and establish strong, profit-oriented business practices and stable financial profiles will most likely see their credit ratings rise, it added.

However, chances of a ratings upgrade are slim for companies that hesitate to make deep, structural changes in their business and have difficulty adapting to the new business climate, Yu-Tsung Chang, managing director of Standard & Poor's Tokyo office, said in a statement.-Reuters