Moody's Investors Service has downgraded Japan's sovereign debt rating by one notch to A1, citing rising uncertainty over the country's ability to hit its debt-reduction goals.

The announcement briefly sent the yen to a seven-year low against the dollar, and pushed 10-year Japanese government bond futures down by 10 ticks.

The downgrade came less than two weeks before Japanese Prime Minister Shinzo Abe seeks re-election in a snap poll where his stimulus policies and a decision to delay a second sales tax hike will be among campaign issues.