Moody’s Investors Service cut its rating on Japan’s government debt by one notch to Aa3 today, blaming a build-up of debt since the 2009 global recession and revolving-door political leadership that has hampered effective economic strategies, Reuters reported.
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Japan is preparing to elect its sixth leader in five years to replace unpopular Prime Minister Naoto Kan, under fire for his handling of the response to the March tsunami and subsequent radiation crisis at a crippled nuclear power plant.

The downgrade, though not out of the blue, served as another reminder of the debt burdens that nearly all of the world’s major advanced economies shoulder, even as policymakers struggle to agree on ways to stimulate sub-par growth without massive new spending.

The United States lost its top-tier AAA rating from Standard & Poor’s earlier this month, and Moody’s warned in June that it might downgrade Italy as Europe’s sovereign debt crisis festers.

Moody’s new rating on Japan’s debt is three notches below the coveted AAA status, which Tokyo lost in 1998, but is still classified as high grade. Japan is now the same level as China, which surpassed it last year to become the world’s second-largest economy, and one notch below Italy and Spain.

Analysts said the downgrade was hardly a surprise, and the reaction in financial markets was muted.