Moody's Investors Service said it will hold a briefing on its sovereign ratings including its rating for Japan in Tokyo on February 9, while giving no indication if it would take any action.

Ratings agency Standard & Poor's cut Japan's rating on January 27 for the fist time in nine years, saying the Democratic Party-led government lacks a coherent plan to lower the ratio of debt to gross domestic product, which is the highest among industrial countries.

Japanese bond yields have largely shrugged off the S&P downgrade, but increased scrutiny of Japan could be a warning to other rich countries with large budget deficits.

It could also complicate policymaking for Prime Minister Naoto Kan, who is struggling in a divided parliament to gain support for an ambitious plan to overhaul the welfare system.

Foreign ratings agencies see uncertainty about Japan's ability to bring forward fiscal reconstruction and think it won't be easy to reduce debt, said Akitsugu Bandou, a senior economist at Okasan Securities in Tokyo.

I don't think rating cuts or warnings will push the government to proceed faster with fiscal and tax reform, because of political deadlock and politicians' inability to persuade those who are against reform due to vested interests.

Moody's statement on Wednesday said the February 9 briefing will be held at 0600 GMT and attended by Thomas Byrne, a senior vice president.

The analysts attending the briefing visit Japan several times a year and are likely to explain their views on Japanese government debt, a spokesman from Moody's said.

Moody's reiterated on January 27 its sovereign rating for Japan at Aa2 with a stable outlook after rival S&P's cut Japan's rating by one notch to AA minus, three levels below the highest possible rating.

S&P's downgrade of Japan, its first since 2002, leaves its credit rating on Japan one notch below those of both Moody's and Fitch, another ratings agency.

In May 2009 Moody's downgraded Japan's foreign currency rating to Aa2 from AAA but raised the domestic debt rating to Aa2 from Aa3. The outlook in both cases is stable.

There are challenges in Japan, so its two-notch differential between AAA countries such as the United States, France and Germany is warranted, Byrne said after lowering Japan's foreign currency rating.

Moody's last lowered Japan's local currency bond rating in May 2002.

The Japanese government bond market took S&P's downgrade in its stride partly because domestic investors hold 95 percent of the country's debt.

This is in sharp contrast to troubled smaller European economies, much of whose debt is held by foreign investors who change their allocations based on credit ratings.

(Editing by Michael Watson)

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