The recent downgrade of Japan by the S&P was not expected, as analysts were focusing on the fact that Japanese government bond yields have been relatively stable, the yen fairly strong, and the government’s readiness to address its debt load. Related exchange traded funds (ETFs) will take a further hit if the downward spiral continues.

Katie Benner for Fortune reports that the agency has been concerned about Japan’s economy for months. One representative said, “The downgrade reflects our appraisal that Japan’s government debt ratios–already among the highest for rated sovereigns–will continue to rise further than we envisaged before the global economic recession hit the country and will peak only in the mid-2020s.”[Japan ETFs: Call It A Comeback.]

Like the United States, Japan seems hard at work trying to get its economy growing at its previous rates and as a result, funds like iShares MSCI Japan (NYSEArca: EWJ) have held up relatively well.

Tisha Guerrero contributed to this article.

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