Japan banking monoliths may ride downgrade wave

Fitch Ratings downgraded Japan's credit rating by one notch late yesterday, a cut bound to bring the ratings of its banks under review.

Fitch cut Japan's rating to A from A+. Fitch said its downgrade "reflects the fact that the Japanese government did not include sufficient structural fiscal measures in its budget for the fiscal year to 2016."

Fitch last downgraded Japan's sovereign rating in May 2012. Cuts to banks' credit ratings soon followed, for the largest names to an A- score, principally on the grounds of reduced support from the central government.

If that course is adopted now some key Japanese banking counterparties can expect to have credit ratings, in the Fitch scale at least, in the BBB range.