Primary dealers in Japanese government bonds warned the finance ministry today of the growing risk of a ratings downgrade over a political standoff that could cause the government to run out of money next month.

The bond dealers voiced their concerns at a meeting that some of the primary dealers requested as the country edges toward its own version of a "fiscal cliff."

Japan is seven months into the current fiscal year, but legislation needed to sell bonds to fund this fiscal year's budget is stuck in limbo due to political bickering.

The government could strike a deal to pass the deficit financing bill in an extra parliament session starting Monday, but without the bill the government would run out of money by the end of November and would have to stop debt auctions in December, throwing the economy and bond markets into chaos.

"Several brokers expressed their concerns about a downgrade," Hidenori Suezawa, chief bond strategist at SMBC Nikko Securities, told reporters after attending the meeting.

"One ratings agency has already downgraded Japan. If we get another downgrade, this could invite foreign selling of Japanese debt," he said.

Finance ministry officials in charge of debt management regularly meet with Japan's 25 primary dealers, the investment banks that buy debt directly from the government and sell it on to other investors.

However, this time primary dealers requested a special meeting with the finance ministry to emphasise how much damage the "fiscal cliff" could do to the bond market and the economy in what amounts to a rebuke of Prime Minister Yoshihiko Noda's management of fiscal policy.