TOKYO, Feb 9 Reuters A future Bank of Japan BOJ interest rate hike could affect the country39;s sovereign debt rating if firms struggle to absorb rising funding costs, an official at SP Global Ratings said on Thursday.

Higher borrowing costs could also lead to a downturn in longterm economic growth, SP said.

Japanese bond yields have crept up on market expectations the BOJ will phase out its yield control policy and start raising interest rates under a new governor who succeeds incumbent Haruhiko Kuroda in April.

While further rises in longterm interest rates could increase Japan39;s already large debt burden, such factors are already taken into account in the current A sovereign debt rating, said Kim Eng Tan, senior director of SP39;s sovereign ratings team in AsiaPacific.

The bigger concern is whether Japanese firms, accustomed to many years of ultralow interest rates, could absorb higher funding costs that come from tighter monetary policy, he told Reuters in an interview.

SP expects the BOJ to tighten policy only gradually with the nearterm impact on the economy likely limited, Tan added.

But the longerterm effect on Japanese firms and the broader economy is a concern as we39;re now at a stage where interest rates seem to be rising, and there39;s quite a bit of uncertainty about how far it will go before it stabilises again, he said.

Even a 12 percentage point increase in interest rates would have a big impact on Japanese firms, particularly those in the…