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Reported by Star-Bulletin staff & wire
Friday, February 23, 2001
S&P cuts rating on Japanese bonds
TOKYO -- Japan's credit rating was cut by Standard & Poor's for the first time in a quarter of a century, on concern the government has to keep borrowing record amounts to prop up the economy. The downgrade brought the country's foreign currency rating to "AA+" from the highest ranking of "AAA." Moody's Investors Service took the same decision more than two years ago. Japan will sell $830 billion in bonds in the next three years to fund its deficit, at a time when the United States is buying back bonds for the first time in 70 years. S&P cut the rating because of "a growing realization that policymakers in Japan were unable to take prompt action for the country's fiscal malaise," said John Chambers, deputy head of S&P's sovereign rating group. Debt will rise to 165 percent of economic output in five years, S&P estimates, the worst among industrial nations.
Economist: Rate cut possible next week
NEW YORK -- Bear Stearns' chief economist Wayne Angell, a former Federal Reserve governor, said today there was a 60 percent chance the Federal Reserve would cut interest rates by half a percentage point early next week. The next meeting of the Federal Reserve is March 20. Meanwhile, Credit Suisse First Boston Inc.'s Thomas Galvin and Lehman Brothers Inc. strategist Jeffrey Applegate cut their forecasts for U.S. stock indexes amid signs slowing profit growth will prevent a rally until later this year. Galvin cut his target on the Standard & Poor's 500 index to 1,520 from 1,600 and his outlook for the Dow Jones industrial average to 12,000 from 12,650. Applegate reduced his target on the S&P 500 to 1,600 from 1,675 and his estimate on the Dow to 12,500 from 13,000.
In other news . . .
SAN FRANCISCO -- All California power alerts were lifted for the first day in nearly six weeks, but talks between the government and the state's cash-strapped utilities apparently stalled without an agreement on a rescue plan. Gov. Gray Davis has proposed buying 26,000 miles of transmission lines to give PG&E and Southern California Edison a cash infusion.