Moody's cuts its rating for Japan

Moody's cut its rating on Japan's government debt by one notch to Aa3 yesterday, blaming a build-up of debt since the 2009 global recession and revolving-door political leadership that has hampered effective economic strategies.

Moody's new rating on Japan's debt is three notches below 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.

"Over the past five years, frequent changes in [Japan's] administrations have prevented the government from implementing long-term economic and fiscal strategies into effective and durable policies," Moody's said.

Japan is preparing to elect its sixth leader in five years to replace unpopular Prime Minister Naoto Kan, pictured, under fire for his handling of the response to the March tsunami and radiation crisis at a crippled nuclear power plant.