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While the world’s attention has been focused on the eurozone debt crisis, Japan’s borrowing has hit a record high of 235% of the country’s GDP. The prospect of going down credit rating ladders as its debt costs increase is hanging over the country.
*According to the OECD, 2012 will see the highest level of debt repayments among the developed nations. Japan will have to extinguish $3 trillion of debt, with over 40% of the sum to be paid in Q1 2012.
The 2012 budget stands at $1.16 trillion, while 49% of the planned revenues are comprised of new loans and 25% of expenditures will be spent on debt servicing.
The cost of borrowing is not high for Japan (the yield of 0.95% for 10-year bonds), as the nation’s debt is mainly domestically held. Insurers, pension funds and banks are holding 95% of the country’s debt. However, high concentration of debt among domestic lenders makes it difficult for the government to make further borrowings. The Public Pension Fund of Japan and Post Bank are holding 35% of the country’s debt.
Experts believe that in 2012, Japan will have to increase borrowing from abroad, which will inevitably lead to an increase in debt costs.
This needs to be translated into Japanese:
Kyle Bass' vindication is coming...