Moody's on Wednesday downgraded Japan's sovereign debt rating to Aa3 from Aa2, three notches below its top AAA rating. The ratings agency said this was because already large budget deficits are likely to swell further amid continued political instability, and as the Mar. 11 earthquake and tsunami have delayed recovery from the 2009 global recession and aggravated deflationary pressures. But Moody's kept the outlook stable as it sees most bonds remaining in the hands of Japanese investors, which allows government fiscal deficits to be funded at the lowes nominal rates in the world. Moody's initiated the rating review on May 31.
展开▼
