Less than a week after Fitch cuts its outlook on Japan sovereign debt to negative, Moody's warned that it may downgrade its sovereign debt rating for Japan.  They warned of a tipping point which may lead to a government funding crisis for heavily indebted Japan.

Moody's kept its rating for Japanese bonds at Aa2.

The much larger than initially expected economic and fiscal costs of the March 11 earthquake are magnifying the adverse effects imparted by the global financial crisis from which Japan's economy has not completely recovered, Moody's said.

It wasn't all bad news for Japan overnight, as Prelim Industrial Production m/m rose 1% after a record plunge of -15.5% immediately after the earthquake and tsunami.  Companies said they planned to increased output further in May-June, bringing it close to pre-disaster levels.

All 3 rating agencies, Moody's, Fitch, and Standard & Poor's now have negative outlooks for Japan.