STOCKS | Fitch Says Japanese Corporate Credit Divergence Is Widening

Fitch Ratings said Japanese corporate credit fundamentals remained broadly resilient in the 12 months through June 2025, with domestic demand among companies in the TOPIX 100 it tracks staying firm. According to Sina Finance, Fitch said credit pressure was concentrated in the auto and auto parts sector and the general trading companies sector, while technology turned net cash and consumer, food retail, and natural resources also improved. Fitch said 9 of 12 sectors posted EBITDA growth faster than revenue growth, and 57% of issuers deleveraged during fiscal 2023-2025. It said the weakest performers in fiscal 2025 were auto and auto parts and general trading companies, with both sectors seeing revenue growth but lower EBITDA and higher leverage. Fitch said the credit environment is expected to improve in fiscal 2026, but unevenly. According to Sina Finance, analysts broadly expect overall earnings to strengthen, led by technology, while auto and auto parts and general trading companies are expected to recover only modestly from a low base.