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The Japan Times
Corporate Japan borrows more as deals and outflows pressure ratings
Japanese firms are borrowing more amid a backdrop of record merger activity and increasing pressure from investors for higher shareholder returns, raising concerns about their credit ratings. Aggregate debt held by firms in the Nikkei 225 has risen by 4.6%, coinciding with a rise in downgrades from major rating agencies. Traditionally, these firms were known for low borrowing and cash reserves, but investor demands for capital deployment are changing that dynamic. Managing this increase in leverage is crucial for maintaining credit stability in an inflationary environment.
MonitorConfidence: MediumShort term horizon
Published 8 Jun 2026, 02:45 UTC1 min read
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Summary
TL;DR
- Japanese corporate debt reached ¥678 trillion ($4.2 trillion) for the fiscal year through March.
- There's a 4.6% increase in borrowing compared to the previous year.
- All major rating agencies downgraded ratings in 2025.
- Investor pressure for aggressive capital deployment is rising.
- A shift from conservative cash management practices is being observed.
Interesting facts
- The total corporate debt in Japan now poses a risk to long-standing conservative financial practices.
- S&P Global Ratings' insights emphasize governance's role in this borrowing trend.