Weiss Ratings Downgrades Sovereign Debt of Japan, S. Korea and 3 Other Nations; Upgrades Kuwait

JUPITER, Florida (September 19, 2011) — Weiss Ratings, an independent rating agency of U.S. financial institutions and sovereign debts, has downgraded the sovereign debt of Japan, Malaysia, Mexico, Pakistan and South Korea; while upgrading the debt of Kuwait.

Weiss Ratings senior financial analyst Gavin Magor commented: “The world economy is now facing massive debts coupled with a prolonged period of reduced demand. In line with this new reality, even countries that have been enjoying high growth rates will have to reduce their spending and debts, despite any short-term pain and sacrifices.”

The changes in the ratings are as follows:

The rating downgrade for Japan reflects the cumulative negative impact of its debt burden, its weakened economy, and sluggish demand from overseas markets. As a result, Japan now joins the U.S. with a C- rating, approximately equivalent to a BBB- on the scales used by other credit rating agencies, or one notch above speculative grade (junk).   

Meanwhile, Pakistan faces not only political and economic instability, but also overreliance on foreign loans. Downgraded to a D, its debt represents a current and real risk to investors.

Mexico is downgraded to C due primarily to a deterioration in its economy, suffering from the drug war and weak demand from the U.S.

Malaysia is still relatively strong financially. But due to its reliance on export markets, ongoing declines in demand from overseas and sparse internal growth, its debt has been downgraded one notch from A- to B+.

South Korea, also downgraded from A- to B+, faces a softening economy due to interest rate moves intended to dampen inflationary pressures. 

Kuwait, in contrast, is upgraded from C+ to B, thanks to continuing low debt levels, growing market acceptance for its debt and overall stability. But it continues to face challenges with low GDP numbers and inflationary pressures.

For the Weiss Sovereign Debt Ratings on all 49 countries covered, click here, and for more information on our approach, refer to "Introducing The Weiss Sovereign Debt Ratings."


About Weiss Ratings

Weiss Ratings, the nation's leading independent provider of financial strength ratings on banks, credit unions, insurance companies as well as sovereign debt ratings on 49 countries, accepts no payments for its ratings from rated entities. By adhering to its independent business model, Weiss outperformed Standard and Poor's, Moody's, A.M. Best and Duff & Phelps (now Fitch) in warning of future life and health insurance company failures according to a 1994 study by the U.S. Government Accountability Office (GAO), while also outperforming its competitors in identifying the safest insurers, according to its follow-up study using the GAO's research methodology. Similarly, Weiss was the only one to identify, in advance, nearly all major banks that failed or required a federal bailout in the 2008-2009 debt crisis.