NEW YORK -- Moody's Investors Service Inc. lowered its ratings of long-term debt of DaiIchi Kangyo Bank Ltd., the largest bank in Japan, and Mitsubishi Bank Ltd., the sixth largest.

Citing exposure to shaky real estate loans, Moody's lowered the banks' senior long-term debt ratings to double-A-3, from double-A-1.

Affected were the equivalent of about $5.2 billion of Dai-Ichi Kangyo debt and $3.5 billion of Mitsubishi debt.

Subordinated debt ratings were lowered to single-A-1, from double-A-2. Ratings of Prime-1 on short-term debt were affirmed.

Impact on Profits Cited

Moody's said the downgrade of Dai-Ichi reflects deterioration of quality in the bank's real-estate related loans and the resulting impact on core profits.

The ratings agency also said it expects further deterioration in loan quality as a result of direct and indirect real estate-related exposure both in Japan and abroad.

Moody's said Mitsubishi is vulnerable to eroding asset quality in Japan, and its Bank of California subsidiary in the United States has been hurt by the soft California real estate market.

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