NEW YORK - August 24, 2011 - Major ratings agency Moody's Investors Service downgraded Japan's sovereign debt rating by one notch Wednesday, putting fresh pressure on the country's political leaders to repair its finances.

Moody's said it was cutting Japan's government bond rating to Aa3 from Aa2, citing the "large budget deficits and the build-up in Japanese government debt since the 2009 global (Depr)ession".

It is the first time since the March 11 earthquake and tsunami that a major ratings agency has downgraded Japan's sovereign debt. Moody's said the outlook was stable.

Prime Minister Naoto Kan described the downgrading as "regrettable", according to Jiji Press news agency, while Finance Minister Yoshihiko Noda defended the creditworthiness of Japan's bonds.

"I will not comment on the actions of a private rating agency. The smooth sales of Japanese government bonds at recent auctions show that confidence remains unshaken," Noda told reporters.