Mizuho Financial Group Inc., which has raised $4.4 billion in capital since December, is under pressure to tap investors again after Moody's Investors Service cut its credit ratings.
Moody's on Wednesday reduced the senior debt ratings on the Tokyo-based company's three main units to Aa3 from Aa2 and said Mizuho Financial is increasingly likely to need "external capital support." The downgrade makes it costlier for Mizuho to sell bonds unless the bank raises more money, said Ismael Pili, an analyst at Macquarie Group Ltd.
Mizuho, which invested $1.2 billion in Merrill Lynch & Co. in January 2008, is trying to reduce equity holdings that threaten to cause the bank's first annual loss in six years. With the economy headed into its deepest postwar recession, Mizuho and larger competitors Mitsubishi UFJ Financial Group Inc. and Sumitomo Mitsui Financial Group Inc. are also grappling with rising loan losses and falling fee income.