Japanese businesses are ramping up borrowing to cover cash shortfalls fueled by record merger activity, booming capital investments and mounting investor pressure for shareholder returns, putting their credit ratings at risk.
Debt held by companies in the Nikkei 225 that reported results for the fiscal year through March totaled ?678 trillion ($4.2 trillion), up 4.6% from a year earlier, data?shows. The increase coincided with a rise in downgrades by all three major rating agencies in 2025.
In the past, corporate Japan was known for hoarding cash and keeping borrowing low. Now, against the backdrop of tighter governance and the return of inflation, investors are pressing companies to deploy capital more aggressively. How they manage that transition will shape their credit profiles and broader stability in uncertain times, according to Hiroki Shibata, managing director at S&P Global Ratings.
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