Japan, the second-largest holder of U.S. Treasuries, said Tuesday it is still confident the U.S. can pay back its debt, despite Monday’s credit-rating downgrade. “The United States is tackling fiscal issues in various ways, so I think the U.S. Treasuries are basically an attractive product for us,” said Japanese Finance Minister Yoshihiko Noda. Only second to China in holders of U.S. debt, Japan’s reserves rose to $1.12 trillion at the end of March after Japan and other Group of Seven countries intervened to help the yen. If Japan and other investors start demanding higher returns for holding riskier U.S. debt, the rise in bond yields could erode the value of Treasuries held in currency reserves and push borrowing costs up in other countries.
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