23-I-0049
December 27, 2023

Japan Credit Rating Agency, Ltd. (JCR) announces the following credit ratings.

Japan<Affirmation>
Foreign Currency Long-term Issuer Rating:
Outlook:
Local Currency Long-term Issuer Rating:
Outlook:AAA
StableAAA
StableRationale(1) The ratings mainly reflect the country's diversified and highly developed economic structure, solid
resilience to external shocks and structure of domestically held government bonds backed by large
household savings. These factors are expected to be retained in the foreseeable future. There is arisk that rising prices will prompt companies and households to curb expenditure, but the rate of priceinflation remains low compared to other major economies. Corporate performance is relatively solid
and the economy is expected to continue its gradual recovery. While there is strong uncertainty over
the outlook of global affairs, the Japanese economy is considered to be relatively stable. Based on
the above, the ratings have been kept unchanged with a Stable outlook. The government aims toachieve a primary balance (PB) surplus by FY2025. However, achieving this target will be challenging.
JCR believes it is important for the government to aim for fiscal consolidation. The government
remains committed to simultaneously achieving economic revival and fiscal rehabilitation over the
medium to long term. JCR will keep a close eye on the future course of specific policy discussions.
(2) Japan’s GDP ranks third in the world. The country has a diversified economic structure and highly
competitive companies. It is highly developed, with per capita GDP (purchasing power parity)
exceeding USD 40,000. The proportion of government bonds held domestically is slowly declining,but it still stays high at nearly 90%. The country continues to run a current account surplus and has
the world's largest net external assets. The banking system also stays stable. The economy is on arecovery path, mainly driven by private demand, with a 1.5% real GDP growth in FY2022. Although
goods exports might be sluggish due to uncertainties in overseas economies, capital investment isstrong on the back of labor shortages and the response to digitalization, and services exports
continue to grow as the number of foreign visitors to Japan increases. JCR expects the economy togrow around 1.5% in FY2023 and continue to grow moderately thereafter.
(3) While the primary fiscal balance deficit of the national and local governments combined (excluding
budgets for recovery and reconstruction measures and GX measures) in FY2022 shrank from theprevious year to around 5% of GDP, the long-term debt balance at the end of the year is estimatedto be 219% of GDP. The ratio is outstandingly high among the sovereigns rated in the AAA range by
JCR. The government has so far aimed to achieve a PB surplus in FY2025 and a stable reductionof the debt-to-GDP ratio. In the Basic Policy on Economic and Fiscal Management and Structural
Reform of June 2023, it was confirmed that the return to a normal expenditure structure will be
pursued without prolonging emergency fiscal expenditures longer than necessary, and that theexisting fiscal targets will be addressed without lowering the 'flag' of fiscal consolidation. However,
the targets look difficult to achieve, with the general account expenditures of the FY2023
supplementary budget swelled to approximately 13.2 trillion yen due to large-scale economic
measures. JCR holds that given the expected increase in social security expenditures due to theageing of the population as well as expenditures on the defense buildup and national land resilienceplans, it is crucial for the government to present a highly feasible path toward fiscal rehabilitation,
including funding of necessary financial resources, and ensure public confidence in its fiscal
management.
Atsushi Masuda, Masato Hotta

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Copyright © Japan Credit Rating Agency, Ltd. All Rights Reserved.

Rating
Issuer: Japan<Affirmation>

Foreign Currency Long-term Issuer Rating:Local Currency Long-term Issuer Rating:

AAA
AAA

Outlook: Stable
Outlook: Stable

Rating Assignment Date: December 22, 2023
The assumptions for the credit ratings and the definitions of the rating symbols are published as "Types of Credit Ratings and Definitionsof Rating Symbols" (January 6, 2014) in Information about JCR Ratings on JCR's website (https://www.jcr.co.jp/en/).
Outline of the rating methodology is shown as "Sovereign and Public Sector Entities" (October 1, 2021) in Information about
JCR Ratings on JCR's website (https://www.jcr.co.jp/en/).
The aforementioned credit ratings are unsolicited. Except in cases of a credit rating for a sovereign, JCR indicates affix "p" after
a rating symbol to distinguish it from a rating with solicitation. The undisclosed information, which has material influence on
the credit rating, was not obtained from the rating stakeholder.
The rating stakeholder participated in the rating process of the aforementioned credit ratings.

Japan Credit Rating Agency, Ltd.
Jiji Press Building, 5-15-8 Ginza, Chuo-ku, Tokyo 104-0061, Japan
Tel. +81 3 3544 7013, Fax. +81 3 3544 7026
Information herein has been obtained by JCR from the issuers and other sources believed to be accurate and reliable. However, because of the possibility of human or mechanical error as well as other factors,
JCR makes no representation or warranty, express or implied, as to accuracy, results, adequacy, timeliness, completeness or merchantability, or fitness for any particular purpose, with respect to any suchinformation, and is not responsible for any errors or omissions, or for results obtained from the use of such information. Under no circumstances will JCR be liable for any special, indirect, incidental orconsequential damages of any kind caused by the use of any such information, including but not limited to, lost opportunity or lost money, whether in contract, tort, strict liability or otherwise, and whether
such damages are foreseeable or unforeseeable. JCR's ratings and credit assessments are statements of JCR's current and comprehensive opinion regarding redemption possibility, etc. of financial obligations
assumed by the issuers or financial products, and not statements of opinion regarding any risk other than credit risk, such as market liquidity risk or price fluctuation risk. JCR's ratings and credit assessments
are statements of opinion, and not statements of fact as to credit risk decisions or recommendations regarding decisions to purchase, sell or hold any securities such as individual bonds or commercial paper.
The ratings and credit assessments may be changed, suspended or withdrawn as a result of changes in or unavailability of information as well as other factors. JCR receives a rating fee paid by issuers for
conducting rating services in principle. JCR retains all rights pertaining to this document, including JCR's rating data. Any reproduction, adaptation, alteration, etc. of this document, including such rating
data, is prohibited, whether or not wholly or partly, without prior consent of JCR.
JCR is registered as a "Nationally Recognized Statistical Rating Organization" with the U.S. Securities and Exchange Commission with respect to the following four classes. (1) Financial institutions, brokers
and dealers, (2) Insurance Companies, (3) Corporate Issuers, (4) Issuers of government securities, municipal securities and foreign government securities.
JCR publishes its press releases regarding the rating actions both in Japanese and in English on the same day. In case that it takes time to translate rating rationale, JCR may publicize the summary version,
which will be replaced by the full translated version within three business days. (Regarding Structured Finance products, JCR only publicize the summary version in English.)

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Copyright © Japan Credit Rating Agency, Ltd. All Rights Reserved.

I n f o r m at i o n D i s c l o s u r e F o r mJapan Credit Rating Agency, Ltd.

Disclosure Required by Paragraph (a)(1)(ii) of Rule 17g-7

1

Issuer:Japan

Rating Publication
Date:

December 27, 2023

The Symbol, Number, or Score in the Rating Scale used to Denote Credit Rating Categories andNotches and, the Identity of the Obligor or the Identity and a Description of the Security or Money
Market Instrument as Required by Paragraph (a)(1)(ii)(A) of Rule 17g-7
Please see the news release. If the credit rating is a private rating, please see the report for private
rating.

2

The version of the procedure or methodology used to determine the credit rating; as Required by
Paragraph (a)(1)(ii)(B) of Rule 17g-7
Please see the news release. If the credit rating is a private rating, please see the report for private
rating.

3

The Main Assumptions and Principles used in Constructing the Procedures and Methodologies used
to Determine the Credit Rating as Required by Paragraph (a)(1)(ii)(C) of Rule 17g-7
The credit rating methodology assumes, in principle, to be applied to assess the likelihood of a given
debt payment in light of its issuer’s condition and business environment, etc. in the relevant future.
There is certain limitation, however, in the time horizon that the rating foresees.
The credit rating methodology assumes, in principle, that the factors posted in the below areparticularly important for such likelihood to be determined, and that the rating determination is madeby evaluating each of them not only quantitatively but also employing qualitative analyses.

A) Economic Base
The likelihood of a given debt payment is highly conditional to the issuing government‘s ability tomaintain/expand the economic base into the future with maintaining soundness of financial systems.
B) Fiscal Base
The likelihood of a given debt payment is highly correlated to fiscal balance, public debt and otherfactors of the issuing government’s fiscal condition.
C) External Positions
The likelihood of a given debt payment is highly correlated to the liquidity positions which change
along with the international balance of payments and the international investment position.

1/5D) Social and Political Bases and Economic Policy
The likelihood of a given debt payment is highly conditional to the social and political stability,
effectiveness of economic and monetary policies as well as international economics.
E) Related Parties’ Stance of Support/ Assistance for the Government
The likelihood of a given debt payment is affected by the stance of the credit enhancement provider andother related parties with regard to their stance of support/ assistance for the issuing government.
F) Order of Seniority in Debt Payment
The likelihood of debt payment can be different between given debts of the same issuer. The likelihoodof debt payment for an individual debt is dependent on the issuing government’s will, and/ or its rank
relative to other debts of the same government in the order of seniority in principal/ interest payment
which is determined by design as financial product or by international practice, etc.

4

The Potential Limitations of the Credit Rating as Required by Paragraph (a)(1)(ii)(D) of Rule 17g-7
The credit rating herewith presented by JCR is its summary opinion with regard to the likelihood ofgiven debt payment and hence not necessarily a perfect representation of such likelihood. The credit
rating is not intended to estimate the probability of default or the loss on given default, either.
The objective of the credit rating herewith presented does not include any concerns other than thelikelihood of debt payment, such as risks of price changes, market liquidity, etc.
The credit rating herewith presented is necessary to be reviewed along with possible changes of theissuer of rated objects in its business performance and/ or circumstances which include regulatoryenvironment, and hence subject to possible alteration.

5

Information on the Uncertainty of the Credit Rating as Required by Paragraph (a)(1)(ii)(E) of Rule
17g-7
The information used for the determination of credit rating as herewith presented is obtained by JCR
from the issuer of rated objects and other sources that JCR trusts in terms of accuracy and reliability
but possibly contains errors due to human, non-human or other causes. Consequently, the credit rating
determined on the grounds of such information does not constitute, explicitly or implicitly, any
representation or warrant of JCR on the information itself or any consequences of its use in terms ofaccuracy, relevance, timeliness, wholeness, market value, or usefulness for any specific purposes.

6

Use of Due Diligence Services of a Third Party in Taking the Rating Action as Required by Paragraph(a)(1)(ii)(F) of Rule 17g-7
There is no use of any third-party due diligence service in the determination of the credit ratingherewith presented.

7

Use of Servicer or Remittance Reports to Conduct Surveillance of the Credit Rating Required by
Paragraph (a)(1)(ii)(G) of Rule 17g-7
There is no use of any servicer or remittance report to conduct surveillance of the credit rating herewithpresented.

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8

The Types of Data Relied Upon for the Purpose of Determining the Credit Rating as Required by
Paragraph (a)(1)(ii)(H) of Rule17g-7
The information posted in the below, which includes data, is used for the determination of the credit
rating herewith presented.
A) Informational and explanatory materials published by the rating stakeholders with regard to theeconomy and fiscal management policy, etc. of the issuing governmentB) Statistics and reports published by an independent organization with regard to the economy and fiscal
status, etc. of the issuing government

9Overall assessment of the Quality of Information Available and Considered in Determining theCredit Rating as Required by Paragraph (a)(1)(ii)(l) of Rule 17g-7
JCR holds its basic policies for securing the quality of information as a base of due diligence for thedetermination of credit ratings. The information used as a base for the determination of credit ratingherewith presented satisfies such policies, which include the publication by the issuer, someindependent media, etc.
JCR sees no particular weakness in the quality of information used for the determination of the credit
rating herewith presented as compared to the information used in other cases of the credit rating forcomparable issuers or ratable objects.
If the credit rating is an Indication, please see the report for Indication.

10 Information Relating to Conflicts of Interest as Required by Paragraph (a)(1)(ii)(J) of Rule 17g-7
JCR does not receive payment of compensation for the determination of the credit rating herewithpresented from either one of those parties who are issuer, underwriter, depositor or sponsor.
JCR did not receive in the last fiscal year in the past payment of compensation from the same party forany kind of JCR’s service other than the determination of public or private credit rating, such as one
in the ancillary business.

or Measure of the Potential Volatility of the Credit Rating as Required by Paragraph
11 Explanation(a)(1)(ii)(K) of Rule 17g-7
A) Economic Base
The credit rating is subject to alteration if there is an improvement or deterioration of the issuer’s
economy or financial systems, etc. The resultant alteration of the credit rating is usually by a notch,with possibility of a few notches if and when the change is large.
B) Fiscal Base
The credit rating is subject to alteration if the issuer increases/ decreases its fiscal deficit/ surplus and its
public debt and thereby makes given debt payment liability less/ more bearable. The resultant alterationof the credit rating is usually by a notch, with possibility of a few notches if and when the change islarge.
C) External Positions
The credit rating is subject to alteration if there is a change in the issuer’s international balance of
payments and international investment position and thereby an improvement/ deterioration of its
liquidity positions. The resultant alteration of the credit rating is usually by a notch, with possibility of afew notches if and when the change is large.

3/5D) Social and Political Bases and Economic Policy
The credit rating is subject to alteration if there is a change in the issuer’s social and political conditions
or economic/ monetary policies, etc. and thereby an improvement/ deterioration of its economy andfiscal positions. The resultant alteration of the credit rating is usually by a notch, with possibility of afew notches if and when the change is large.
E) Related Parties’ Stance of Support/ Assistance for the Issuer
The credit rating is subject to alteration if there is a change in the credit enhancement provider or otherrelated parties with regard to their stance of support/ assistance for the issuing government and thereby
an improvement/ deterioration of its economy, fiscal positions and liquidity positions. The resultant
alteration of the credit rating is usually a notch, with possibility of a few notches if and when the change
is large.

F) Order of Seniority in Debt Payment
The credit rating is subject to alteration if there is a change in the rated debt’s status in the order ofseniority relative to other debts, due to improvement/ deterioration of the issuer’s fiscal condition
and/or will. The resultant alteration of the credit rating is usually a notch, with possibility of a few
notches if and when the change is large.
G) International Economies
The credit rating is subject to alteration if there is a change in the international economies, commodity
or foreign exchange markets, etc. and thereby, through international balance of payments, animprovement/ deterioration in the issuer’s fiscal balance or debt payment capacity. The resultant
alteration of the credit rating is usually by a notch, with possibility of a few notches if and when thechange is exceptionally large.
H) Various Events
The credit rating is subject to alteration on occurrence of various events, such as domestic unrest, war,
natural disaster, etc. which are unforeseeable at the time when the credit rating is determined, causing asignificant change on the issuer’s economy, fiscal positions, etc. The resultant alteration of the credit
rating could be by a notch but more often than not as much as a few notches.

12

Information on the Content of the Credit Rating, Including the Historical Performance of the Credit
Rating and the Expected Probability of Default and the Expected Loss in the Event of Default as
Required by Paragraph (a)(1)(ii)(L) of Rule 17g-7
Historical records of the credit rating herewith presented are posted in the end of this paper.
The credit rating herewith presented by JCR is its summary opinion with regard to the likelihood ofgiven debt payment and hence not necessarily a perfect representation of such likelihood. The credit
rating is not intended to estimate the probability of default or the loss on given default, either.
Facts of the probability of default are posted as Form NRSRO Exhibit 1 on the JCR website under the
URL:
https://www.jcr.co.jp/en/service/company/regu/nrsro/on the Sensitivity of the Credit Rating to Assumptions Made as Required by Paragraph
13 Information(a)(1)(ii)(M) of Rule 17g-7
A) Economic Base
The credit rating herewith presented could be changed if and when the assumptions made at the time ofits determination turn out to be inaccurate with regard to the issuer’s economy or financial systems, etc.
The resultant change of the credit rating is most likely by a notch, as JCR speculates, but possibly as
much as a few notches if the development is rapid in improvement or deterioration of the issuer’s
economy or financial systems on some drastic change in environments, etc.
B) Fiscal Base
The credit rating herewith presented could be changed if and when the assumptions made at the time ofits determination turn out to be inaccurate with regard to the issuer’s fiscal conditions in terms ofannual balance or public debt. The resultant change of the credit rating is most likely by a notch, as JCR
4/5

speculates, but possibly as much as a few notches if the development is rapid in improvement or
deterioration of the issuer’s fiscal condition on some drastic change in its economy.

C) External Positions
The credit rating herewith presented could be changed if and when the assumptions made at the time ofits determination turn out to be inaccurate with regard to the issuer’s liquidity positions reflecting
improvement or deterioration of the international balance of payments and the international investment
position. The resultant change of the credit rating is most likely by a notch, as JCR speculates, but
possibly as much as a few notches if the development is rapid in improvement or deterioration of theissuer’s liquidity positions on some drastic change in the country’s economic/ fiscal conditions andfinancing activities, etc.
D) Social and Political Bases and Economic Policies
The credit rating herewith presented could be changed if and when the assumptions made at thetime of its determination turn out to be inaccurate with regard to the issuer’s social and politicalbases and economic/ monetary policies. The resultant change of the credit rating is most likely by anotch, as JCR speculates, but possibly as much as a few notches if the country’s situation changes
drastically, making the issuer’s social and political bases and economic/monetary policies
significantly improved or deteriorated.
E) International Economics
The credit rating herewith presented could be changed if and when the assumptions made at the time ofits determination turn out to be inaccurate with regard to the prospects of the international economies orcommodity/ foreign exchange markets, etc. JCR expects the change should be most likely by a notch
but could be as much as a few notches, should the economy or the markets change so greatly.
on the Representations, Warranties, and Enforcement Mechanisms of an Asset-backed
14 Information
Security as Required by Paragraph (a)(1)(ii)(N) of rule 17g-7
The credit rating herewith presented is not for an ABS product, and hence no relevant issue.

Japan Credit Rating Agency, Ltd.
Jiji Press Building, 5-15-8 Ginza, Chuo-ku, Tokyo 104-0061, Japan
Tel. +81 3 3544 7013, Fax. +81 3 3544 7026

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The Historical Performance of the Credit Rating
Issuer Name

Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan

Issue Name

Issuer(Long-term)(LC)
Issuer(Long-term)(LC)
Issuer(Long-term)(LC)
Issuer(Long-term)(LC)
Issuer(Long-term)(LC)
Issuer(Long-term)(LC)
Issuer(Long-term)(LC)
Issuer(Long-term)(LC)
Issuer(Long-term)(LC)
Issuer(Long-term)(LC)
Issuer(Long-term)(LC)
Issuer(Long-term)(LC)
Issuer(Long-term)(LC)
Issuer(Long-term)(LC)
Issuer(Long-term)(LC)
Issuer(Long-term)(LC)
Issuer(Long-term)(LC)
Issuer(Long-term)(FC)
Issuer(Long-term)(FC)
Issuer(Long-term)(FC)
Issuer(Long-term)(FC)
Issuer(Long-term)(FC)
Issuer(Long-term)(FC)
Issuer(Long-term)(FC)
Issuer(Long-term)(FC)
Issuer(Long-term)(FC)
Issuer(Long-term)(FC)
Issuer(Long-term)(FC)
Issuer(Long-term)(FC)
Issuer(Long-term)(FC)
Issuer(Long-term)(FC)
Issuer(Long-term)(FC)
Issuer(Long-term)(FC)
Issuer(Long-term)(FC)

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Publication Date

RatingOutlook/Direction

June 12, 2002
July 14, 2003
May 14, 2004
June 17, 2005
August 28, 2006
August 13, 2007
September 22, 2010
October 28, 2011
March 15, 2013
December 25, 2013
March 27, 2015
July 14, 2016
June 16, 2017
August 9, 2018
November 8, 2019
March 5, 2021
June 16, 2022
June 12, 2002
July 14, 2003
May 14, 2004
June 17, 2005
August 28, 2006
August 13, 2007
September 22, 2010
October 28, 2011
March 15, 2013
December 25, 2013
March 27, 2015
July 14, 2016
June 16, 2017
August 9, 2018
November 8, 2019
March 5, 2021
June 16, 2022

AAA
AAA
AAA
AAA
AAA
AAA
AAA
AAA
AAA
AAA
AAA
AAA
AAA
AAA
AAA
AAA
AAA
AAA
AAA
AAA
AAA
AAA
AAA
AAA
AAA
AAA
AAA
AAA
AAA
AAA
AAA
AAA
AAA
AAA

Negative
Negative
Negative
Negative
StableStableStableStableStableStableStableNegative
Negative
StableStableStableStableNegative
Negative
Negative
Negative
StableStableStableStableStableStableStableNegative
Negative
StableStableStableStableAttachment