Moody's Investor Service said it has put Nomura Holdings Inc.'s credit ratings under review for possible downgrade.

Nomura, Japan's biggest brokerage, currently holds the second-lowest investment grade rating, Baa2. If a downgrade happens, Nomura's debt will stay only one notch above "junk" grade. Risk-averse investors are usually cautious about investing in Baa3 rated bonds, especially if the rating was recently downgraded.

Moody's said the move has been prompted by the ongoing losses in the Nomura's international capital market activities and will examine the potential impact of these losses on the strategic direction of the firm.

Nomura expressed disappointment at Moody's decision, which came after the Japanese company posted its first quarterly loss in two and a half years on Tuesday, due to a sharp drop in investment banking revenues.

The rating agency said in a statement that Nomura faces particular difficulties, compared with its peers, as it has suffered from low underlying profitability in its wholesale segment. In response, Nomura said it had already identified the problem and recently instigated a $1.2 billion cost-cutting program.

Moody's downgraded Nomura from A3 to Baa2 in May 2009, raising questions about the profitability of Nomura's Lehman acquisition. The strategic options facing Nomura due to the failure to generate synergies and returns from the Lehman acquisition will also be taken into account by Moody's for the potential downgrade.

At the same time, Moody's recognized Nomura's improved balance sheet profile, with leverage down to 18 times. The company also has manageable exposures to European peripheral countries.

Nomura's stock has lost more than half of its value this year before today.