Tokyo, August 24, 2011 -- Moody's Japan K.K. has taken the following rating
actions on Japanese bank-affiliated finance companies.
(1) Downgraded by one notch the long-term issuer and senior unsecured
debt ratings of the following and placed the ratings on review for downgrade:
Mitsubishi UFJ Lease and Finance Co., Ltd.
Mitsubishi UFJ NICOS Co., Ltd.
Sumishin Panasonic Financial Service Co., Ltd.
Orient Corporation
(2) Downgraded by one notch the commercial paper rating of:
Sumishin Panasonic Financial Services Co., Ltd.
(3) Placed the commercial paper and short-term issuer ratings of
the following on review for downgrade:
Mitsubishi UFJ Lease and Finance Co., Ltd.
Mitsubishi UFJ NICOS Co., Ltd.
This rating action follows Moody's rating action on August 24, 2011,
to downgrade the long-term deposit ratings and all the long-term
credit ratings of their parent banks or main shareholders.
These parent banks or main shareholders are:
Bank of Tokyo-Mitsubishi, Ltd. (BTMU, Aa3 stable)
-- the core bank of the Mitsubishi UFJ Financial Group Inc.
(MUFG) -- and main shareholder of Mitsubishi UFJ Lease and Finance
Co., Ltd. and parent for Mitsubishi UFJ NICOS Co.,
Ltd.
Sumitomo Trust and Banking Co., Ltd. (STBC,
A1 stable) -- the parent for Sumishin Panasonic Financial Services
Co., Ltd.
Mizuho Bank, Ltd. (MHBK, A1 under review for possible
downgrade) and Mizuho Corporate Bank, Ltd. (MHCB, A1
under review for possible downgrade) -- two primary operating
banks of Mizuho Financial Group, Inc. -- and
main shareholder of for Orient Corporation.
A list of the affected ratings can be found at the end of this press release.
RATING RATIONALE
Moody's ratings for these bank-affiliated finance companies incorporate
their stand-alone credit financial strength and the probability
of extraordinary financial support from their parent banks or main shareholders
in case of stress.
Specifically, the downgrades of these bank-affiliated finance
companies' ratings have been prompted by the downgrades of their
parent banks' ratings, which indicate the weakened capacity
of their respective parent banks or main shareholders to support them
in a time of stress.
Moody's decision to continue to place these ratings on review for
downgrade reflects Moody's ongoing concern that their standalone
financial strength may be subject to continued downward pressure,
in view of the stagnant state of the domestic operating environment.
The leasing companies face the challenge of a decline in the volume of
leasing transactions due to weakening demand. In Moody's
view, this trend may continue to pressure their top-line
revenues over the medium-term.
And the credit card companies also face the dual challenges of intensive
competition and a weak domestic economy, and which would adversely
affect top-line revenues. In addition, overpaid-interest
claims continue to damage the prospects for a stabilization in their bottom-line
profits, although on a much smaller scale when compared to the Japanese
consumer finance companies.
In its review process, Moody's will reassess the prospects
for the standalone financial strength of these bank-affiliated
finance companies as well as the appropriate level of support consideration
from their parent banks or main shareholders, and reflect such factors
in the final ratings.
Moody's notes that on August 15, 2011. it published
a request for comment on "Proposal to Update: Finance Company
Global Rating Methodology". It is likely that the review
of these ratings will take into account eventual revisions to the finance
company methodology.
The principal methodology used in this rating was "Analyzing the Credit
Risks of Finance Companies: Rating Methodology" published on September
30, 2010, and available on www.moodys.co.jp.
List of the affected ratings are as follow (includes prospective ratings
on shelf registrations/programs where applicable).
The following ratings have been downgraded and placed on further review
for downgrade.
Mitsubishi UFJ Lease & Finance Co., Ltd. (Lead
analyst: Tetsuya Yamamoto)
LT Issuer Rating (Domestic): to A2 from A1
Senior Unsecured (Foreign): to A2 from A1
Sumishin Panasonic Financial Services Co., Ltd. (Lead
analyst: Yasuhiro Matsumoto)
LT Issuer Rating (Domestic): to A3 from A2
Mitsubishi UFJ NICOS Co., Ltd. (Lead analyst:
Tetsuya Yamamoto)
LT Issuer Rating (Foreign): to A2 from A1 *
Orient Corporation (Lead analyst: Tetsuya Yamamoto)
LT Issuer Rating (Domestic): to Baa2 from Baa1
The following ratings have been downgraded.
Sumishin Panasonic Financial Services Co., Ltd. (Lead
analyst: Yasuhiro Matsumoto)
Commercial Paper (Domestic): to Prime-2 from Prime-1
The following ratings have been placed under review for downgrade.
Mitsubishi UFJ Lease & Finance Co., Ltd. (Lead
analyst: Tetsuya Yamamoto)
Commercial Paper (Domestic): Prime-1
Mitsubishi UFJ NICOS Co., Ltd. (Lead analyst:
Tetsuya Yamamoto)
Commercial Paper (Domestic): Prime-1 *
ST Issuer Rating (Foreign): Prime-1 *
* By Japan regulations, these ratings were initiated by Moody's
Investors Service and were not requested by the issuer. The rating
committee was provided, for purposes of the rating, access
to the books, record and other relevant internal documents of the
rated entity or related third parties.
REGULATORY DISCLOSURES
Information sources used to prepare the credit rating are the following:
parties involved in the ratings, parties not involved in the ratings,
public information, confidential and proprietary Moody's information.
Measures taken to ensure the quality of this information include use of
public information, reviews by a third party and verification by
the lead analyst.
Moody's considers the quality of information available on the issuer or
obligations satisfactory for the purposes of maintaining a credit rating.
Moody's adopts all necessary measures so that the information it uses
in assigning a credit rating is of sufficient quality and from sources
Moody's considers to be reliable including, when appropriate,
independent third-party sources. However, Moody's
is not an auditor and cannot in every instance independently verify or
validate information received in the rating process.
Credit ratings are Moody's current opinions of the relative future credit
risk of entities, credit commitments, or debt or debt-like
securities. Moody's defines credit risk as the risk that an entity
may not meet its contractual, financial obligations as they come
due and any estimated financial loss in the event of default. Credit
ratings do not address any other risk, including but not limited
to: liquidity risk, market value risk, or price volatility.
Credit ratings do not constitute investment or financial advice,
and credit ratings are not recommendations to purchase, sell,
or hold particular securities. No warranty, express or implied,
as to the accuracy, timeliness, completeness, merchantability
or fitness for any particular purpose of any such rating or other opinion
or information is given or made by Moody's in any form or manner whatsoever.
The credit risk of an issuer or its obligations is assessed based on information
received from the issuer or from public sources. Moody's may change
the rating when it deems necessary. Moody's may also withdraw the
rating due to insufficient information, or for other reasons.
Moody's Japan K.K. is a credit rating agency registered
with the Japan Financial Services Agency and its registration number is
FSA Commissioner (Ratings) No. 2. The Financial Services
Agency has not imposed any supervisory measures on Moody's Japan K.K.
in the past year.
Please see ratings tab on the issuer/entity page on the Moody's website
for the last rating action and the rating history.
The date on which some Credit Ratings were first released goes back to
a time before Moody's Credit Ratings were fully digitized and accurate
data may not be available. Consequently, Moody's provides
a date that it believes is the most reliable and accurate based on the
information that is available to it. Please see the ratings disclosure
page on the Moody's website for further information.
Please see the Credit Policy page on the Moody's website for the methodologies
used in determining ratings, further information on the meaning
of each rating category and the definition of default and recovery.
Tokyo
Kei Kitayama
Representative Director
Moody's Japan K.K.
JOURNALISTS: (03) 5408-4110
SUBSCRIBERS: (03) 5408-4100
Hong Kong
Stephen Long
MD - Financial Institutions
Financial Institutions Group
Moody's Investors Service Hong Kong Ltd.
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (852) 3551-3077
Moody's Japan K.K.
Atago Green Hills Mori Tower 20fl
2-5-1 Atago, Minato-ku
Tokyo 105-6220
Japan
JOURNALISTS: (03) 5408-4110
SUBSCRIBERS: (03) 5408-4100
Moody's downgrades Japanese bank-affiliated finance companies and continues to place them on review for downgrade following bank downgrades
