Japan will suffer severe economic costs from Friday's devastating earthquake and tsunami but ratings agencies Moody's and Standard & Poor's said they did not anticipate changing their ratings stances as a result.

S&P cut its rating of Japan to 'AA- in January and Moody's changed its outlook on its Aa2 sovereign rating to negative last month, warning that a downgrade was likely if the government failed to bring its ballooning public debt under control.

Japan is already saddled with debts twice the size of its $5 trillion economy and one initial estimate has put the economic cost of the still unfolding disaster at between 14-15 trillion yen ($171-183 billion).

The estimate by Credit Suisse was based on costs just in the quake-hit regions in the north of the country and does not include other possible losses, for instance manufacturing slowdowns elsewhere because of electricity shortfalls.

The additional costs will add to the already existing fiscal weaknesses, Takahira Ogawa, S&P director of sovereign and international public finance ratings, said on Monday.

The economic prospects might be harmed, but, in the absence of a prolonged damage to the macroeconomic situation, this should also be within the current rating level, he said in a statement emailed to Reuters.

Moody's Investors Service said there were no signs of an immediate fiscal crisis in Japan.

We still see that the market will readily fund the government right now, Tom Byrne, Moody's senior vice president, told Reuters Insider in an interview.

Japanese ratings agency Rating and Investment Information said it would closely examine an extra budget Tokyo is considering in response to the disaster before taking any rating action. It affirmed Japan's sovereign rating in January at 'AAA' with a negative outlook.

Earlier, finance minister Yoshihiko Noda said it was too early to put together a firm figure to compile a supplementary budget.

DAY OF RECKONING

Byrne at Moody's said the Japanese government's target of issuing 44 trillion yen ($537 billion) in domestic bonds this year would most likely be overshot due to funding needed for reconstruction.

Byrne said that how the Japanese government bond market reacts in the coming weeks to additional issuance could be crucial.

On the downside, it could move the day of reckoning a bit closer, where the market hesitates to finance very readily JGBs and they put on a risk premium because the amount of debt will increase, he said.

Byrne said he saw no need to alter Moody's rating with a negative outlook.

We have a negative outlook, that still stands, he said. At least the way we see things presently, our assessment hasn't changed much. In the near-term, Japan can cope with its fiscal problems - issue debt at high prices and low yields - and that hasn't changed yet.

On the corporate side, Byrne said Moody's was concerned about power companies such as TEPCO, refining companies, insurers and a rail operator in the aftermath of the earthquake.

He said the mega Japanese banks seem to be okay because they did not have much direct exposure to the worst-hit area in northern Japan, although some regional banks could be affected.

Byrne added that the yen could strengthen as it did in the aftermath of the 1995 Kobe earthquake as the Japanese government liquidated overseas assets to fund reconstruction. (Additional reporting by Jonathan Gordon; Editing by Raju Gopalakrishnan and Richard Borsuk)

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