Moodys.com
Please Note
We brought you to this page based on your search query. If this isn't what you are looking for, you can continue to Search Results for ""
The maximum number of items you can export is 3,000. Please reduce your list by using the filtering tool to the left.
Close
Close
Email Research
Recipient email addresses will not be used in mailing lists or redistributed.
Recipient's
Email

Use semicolon to separate each address, limit to 20 addresses.
Enter the
characters you see
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
New Issue:

MOODY'S DOWNGRADES GLENDALE, ARIZONA'S G.O. AND EXCISE TAX RATINGS; OUTLOOK REVISED TO STABLE FROM NEGATIVE

09 Feb 2011

APPROXIMATELY $$815.6 MILLION OF DEBT AFFECTED

Glendale (City of) AZ
Municipality
AZ

Moody's Rating

ISSUE

RATING

Excise Tax Revenue Bonds, Second Lien Series 2011A (Tax-Exempt)

A1

  Sale Amount

$107,000,000

  Expected Sale Date

02/15/11

  Rating Description

Sales and Use Tax, Second Lien

 

Excise Tax Revenue Bonds, Taxable Second Lien Series 2011B

A1

  Sale Amount

$9,000,000

  Expected Sale Date

02/15/11

  Rating Description

Sales and Use Tax, Second Lien

 

 
Moody's Outlook   Stable
 

Opinion

NEW YORK, Feb 9, 2011 -- Moody's Investors Service has downgraded the City of Glendale, Arizona's general obligation and excise tax ratings as follows: the city's general obligation rating (affecting $223.0 million in outstanding bonds)was revised to Aa2 from Aa1; the senior lien excise tax rating (affecting $269.7 million) was revised to Aa3 from Aa2, the second lien excise tax rating (affecting $123.2 million, including the current offering) was revised to A1 from Aa3; and the third lien excise rating (affecting $199.8 million) was revised to A2 from A1. The current credit review was conducted in conjunction with the city's upcoming offering of Glendale Municipal Property Corporation Excise Tax Revenue Bonds, Second Lien Series 2011A (Tax-Exempt) and Taxable Second Lien Series 2011B in the aggregate amount of approximately $110.9 million. In addition to these rating actions, Moody's has revised the outlook on the city's general obligation and related ratings to stable from negative. The current offering is secured by rental payments to be made by the city to the corporation under a lease agreement; the city's obligation to make lease payments is unconditional and not subject to appropriation. The city has pledged a second lien on its excise tax revenues, which consist of unrestricted local sales and use taxes, state shared revenues, and other fees and charges to make such payments. Additionally, the city has pledged future parking revenues (if any) associated with arena events to the Series 2011 bonds.

RATING RATIONALE

The rating and downgrade reflects the city's high debt burden, high leverage of the city's largest general fund revenue, relatively low debt service coverage of all three liens of excise tax revenue bonds and the declining trend of pledged revenues. The city's Aa2 general obligation rating reflects its weakened local economy which benefits from its position as a sports and entertainment destination even during the recession, a large tax base, below average socioeconomic indices, and narrowed but still healthy financial reserves which help mitigate the reliance on economically sensitive revenues.

PLEDGED EXCISE TAX REVENUES, WHICH HAVE DECLINED IN RECENT YEARS, PROVIDE NARROWED, YET ADEQUATE DEBT SERVICE COVERAGE

The current offering significantly increases the amount of the city's total excise tax debt to approximately $592.6 million, which is a contributing factor in the rating assignment. Debt service coverage of the city's excise tax bonds is well below average when compared to the local peer group. In Arizona, excise tax revenues typically comprise two-thirds of operating revenues and, correspondingly, coverage levels for excise tax bonds are strong, generally in the double-digit range. Fiscal 2010 pledged revenues provide coverage of maximum annual senior lien debt service of 4.8 times. With the addition of the current offering, fiscal 2010 pledged revenues provide maximum annual second lien debt service coverage of 3.4 times, and third lien coverage of 2.4 times.

Pledged revenues include Glendale's unrestricted local sales and use tax collections derived from a 1.2% tax rate, the city's distribution of state shared sales and income tax monies, as well as various franchise fees, licenses and permit revenues. In fiscal 2010, the local sales tax revenues comprised 49.8% of the pledged excise tax revenues, the state-shared sales tax revenues 16.5%, state-shared income tax revenues 29.0%, and licenses and permits 4.7%. From fiscal 2005 to 2010, Glendale's excise tax collections increased at a somewhat flat average annual rate of 1.9%. This figure includes a 7.2% decline in fiscal 2009 and an 8.7% decline in fiscal 2010. The city currently estimates that total fiscal 2011 excise tax revenues will decline again by 5.6%; the city sales tax will be between $55.5 million (a 3.1% increase over 2010); state-shared sales taxes projected at $17.7 million (a 0.5% decline over 2010); and state-shared income taxes projected at $23.7 million (a 24.4% decline over 2010). Moody's notes that given the two-year lag in the disbursement of income tax revenues to local governments, the fiscal 2011 amount is known. Licenses and permit revenues are budgeted to be flat (a modest 0.8% increase).

Moody's notes that the amount of debt service supported by the general fund is substantial, reflective of management's decision to highly leverage the city's primary operating resource. Total maximum annual excise tax debt service will represent a substantial 28.6% of fiscal 2010 general fund revenues (not including transfers). Although new additions to the city's retail base helped mitigate revenue declines during the recession, the sluggish recovery continues to have a negative effect on the growth of pledged revenues. Over the long term, city officials expect to fully support these long term debt obligations from anticipated revenues associated with the economic development projects around the NHL Arena, Cardinal Stadium, and Cabela's primarily from new sales tax dollars, parking revenues, and event ticket surcharges.

CURRENT OFFERING FUNDS THE PURCHASE OF PARKING RIGHTS ASSOCIATED WITH NHL FRANCHISE; LEGAL CHALLENGE MAY RESULT IN ADDITIONAL RISK TO BOND HOLDERS

The bonds fund the purchase of the rights to parking facilities attributable to the Jobing.com Arena, a 17,500 seat multipurpose facility which is owned by the city and is home to the Phoenix Coyotes, a National Hockey League team. The city will purchase the right to receive parking revenues from the parking facilities (approximately 5,500 surface lot spaces) from the Coyotes new owners. Glendale constructed the Jobing.com Arena in 2003 and the hockey team is the primary tenant. Following the bankruptcy filing of the former owner of the team and an attempt to sell the Coyotes to a potential buyer seeking move it to Canada, the NHL purchased the assets and liabilities of the former team owner and former arena manager. The NHL now plan to sell the Phoenix Coyotes, including the parking rights to Coyotes Newco, LLC. Using the proceeds of the Series 2011 bonds, the city will obtain all of the rights to charge and to receive revenues in connection with the right to use 5,500 parking spaces for events at the arena. In addition, the team, the arena manger and the city will enter into an arena lease and management agreement (ALMA), to be executed and delivered concurrently with the delivery of the current offering, as well as a 30 season use and non-relocation agreement with the team.

The current offering is subject to litigation risk. The Goldwater Institute is currently conducting an investigation of this transaction and has threatened litigation if the institute feels that the transaction constitutes a "gift of public funds". In addition to the bond counsel opinion, the city has engaged a special counsel to provide an "enforceability opinion" which states that the agreements between the city and the team are legal, valid and binding obligations. The opinion relies, in part, upon a market valuation report performed by CBRE Consulting which evaluates the value of benefits the city will receive from the purchase of the parking rights and other benefits.

ADEQUATE LEGAL PROVISIONS SECURE CURRENT OFFERING OF SECOND LIEN EXCISE TAX BONDS; ABSENCE OF FULLY-FUNDED DEBT SERVICE RESERVE IS A CREDIT WEAKNESS

The legal provisions under the trust indenture are satisfactory, given that rental payments from the city to the corporation are unconditional and are not subject to annual appropriation. The rental payments are secured by a second lien pledge on the city's excise tax revenues (more fully described below) and a lien on parking revenues attributable to the facilities. Currently, parking at the arena is free, so there are no pledged parking revenues at this time. Legal provisions delineate an additional bonds test and rate covenant for combined senior, and junior lien obligations of 2.0 times and seniors only of 3.0 times. There is no debt service reserve requirement for the second lien obligations, which Moody's believes is a credit weakness. An approximately $8.6 million revenue stabilization account funded with proceeds of the Series 2011B bonds provides a modest amount of additional bondholder security. Amounts in the revenue stabilization fund may be used at the direction of the city to pay debt service on 2011 bonds, upon a determination by the city that the amount of revenues derived by the city from the parking facilities during the preceding fiscal year is less than rental payments related to debt service on the Series 2011 bonds for the current fiscal year. Moody's notes, however, that the city is not obligated to replace any amounts withdrawn from the revenue stabilization fund.

COMMERCIAL AND RESIDENTIAL EXPANSION SLOWING AS A RESULT OF THE STAGNANT RECOVERY FROM THE RECESSION

Glendale's economy is characterized by growing commercial and residential activity with a significant military presence. Luke Air Force Base is the city's largest employer with over 8,000 employees including reserves and civilians. Other major employers within the city include retail, health care, local government and manufacturing. The American Automobile Association operates a regional corporate office in Glendale with approximately 1,175 employees. The Jobing.com Arena, as well as the University of Phoenix Stadium, home to the Arizona Cardinals, together with a new spring training stadium for Chicago White Sox and Los Angeles Dodgers are expected to increase the city's destination appeal and further boost sales and use tax revenues over the long term. The hockey arena, which is located near Loop 101 and Glendale Avenue, is also used for concerts and other similar events.

Spurred by both residential and commercial construction, tax base growth has averaged 11.4% annually for the most recent five-year period, which is slightly above the national median for cities. However, the city's 2010 full market value declined slightly, by 1.9%, and then by a substantial 16.0% in 2011 reflecting the lagged impact of lower property values and slowed commercial construction. Consistent with the expectations of other Phoenix area local governments, Moody's anticipates further taxbase declines for Glendale in 2012. Despite these declines, the city's taxbase remains substantial at $17.3 billion in 2011, which is above average in size with other similarly rated cities in the western states. The city's secondary assessed value (AV) is comprised of primarily residential property (55%), followed by commercial and industrial entities (40%). The city has relatively little agricultural and vacant land (5%) and build out is estimated in about 10 to 15 years. Top ten taxpayers represent a modest 7.1% of AV, and primarily comprised of a hospital, utilities, a large retail center, and warehouses. According to 2006 - 2008 U.S. Census estimates, wealth indices for Glendale are below the median for Aa1 rated cities nationally with per capita and median family incomes at 91.9% and 99.8% of state levels respectively.

NARROWED, YET STILL HEALTHY RESERVE LEVELS DESPITE RECENT OPERATING DEFICITS

Despite recent declines in general fund balances, Glendale's financial position remains in line with its peers nationally. The city has experienced large operating deficits over the last two years. In fiscal 2009, Glendale's general fund balance declined by $13.8 million to $52.6 million (35.5% of general fund revenues) and declined by an additional $13.8 million (estimated) in fiscal 2010 to $38.8 million (27.5% of general fund revenues). Although these balances approximate the national median for cities and are well within the norm for cities in its peer group, they are somewhat below the norm for cities in Arizona. The city's excise tax revenues, which typically account for approximately three-fourths of general fund revenues, are comprised of state and local sales taxes, state income taxes, and state motor vehicle in-lieu taxes. Excise tax revenues declined by 7.2% in fiscal 2009 and 8.7% in fiscal 2010 and contributed to the city's operating deficits. Of continued concern, Moody's notes that the amount of debt service supported by the general fund is substantial, reflective of management's decision to highly leverage the city's primary operating resource. Total maximum annual excise tax debt service will represent a substantial 28.6% of fiscal 2010 general fund revenues.

In response to its budget challenges, the city implemented ongoing and one-time cuts in fiscal 2009 and additionally implemented ongoing cuts at the start of fiscal 2010 and continuing into fiscal 2011. The city's overall authorized staffing peaked in fiscal year 2009 at 2,200 FTE's and is at 1,971 for fiscal year 2011, a reduction of 234 FTE's or 10.5%. Challenges for the city's fiscal 2011 financial operations remain however. Although expenditures are approximately $2.1 million (2.8%) below budget for the first six months of the fiscal year, general fund revenues are $4.3 million below budget ($5.8%). Given the stagnant economy, Moody's believes there is a high likelihood that additional budgetary pressures will remain through fiscal 2012. Moody's considers the city's practice of maintaining healthy general fund reserves an important credit factor given the city's dependence on economically sensitive local and state revenue streams. Over the long term, Moody's expects management to maintain healthy general fund reserves to offset reliance on local and state sales taxes.

DEBT LEVELS EXPECTED TO REMAIN HIGH

With the current offering, Glendale's direct and overall debt burdens remain high and are well above similarly rated cities across the nation. The city's direct debt burden of 4.8% is nearly five times the national median of 1.0%. Overall debt measures 6.9% of full value, well in excess of national medians for all cities of 2.6%. Approximately 69% of the city's direct debt is attributable to the $592.6 million in excise tax debt which will be outstanding with the current offering. Management has no near-term general fund borrowing plans.

What could move the rating - UP

- Substantial appreciation in socioeconomic measures

- Significant improvement in financial performance resulting in reserve levels that outpace the city's rating peer group

What could change the rating - DOWN

- Continued deterioration of financial position

- Prolonged downturn in the local economy

- Continued decline in excise tax revenues

- Significant additional leveraging of general fund resources

Outlook

The stable outlook reflects Moody's expectation that slowly stabilizing economic conditions in the region will enable the city to maintain its current satisfactory financial position despite ongoing budgetary challenges. The outlook also anticipates that future general fund secured borrowing will be minimal until economic conditions rebound and debt affordability improves.

KEY STATISTICS

Coverage of senior lien MADS by FY 2010 pledged excise tax revenues: 4.8 times

Coverage of second lien MADS by FY 2010 pledged excise tax revenues: 3.4 times

Coverage of third lien MADS by FY 2010pledged excise tax revenues: 2.4 times

Fiscal 2010 pledged revenues: $108.0 million

Average annual growth in pledged revenues, 2005 to 2010: 1.9%

2009 estimated population: 249,811

2006 - 2008 estimated per capita income: $23,351 (91.1% of state)

2006 - 2008 estimated median family income: $60,351 (99.8% of state)

2006 - 2008 estimated median housing value: $236,000 (100.6% of state)

Full value, 2011: $17.3 billion

Average annual growth in full value, 2006 to 2011: 11.4%

Full value per capita: $69,332

Direct debt burden: 4.8%

Overall debt burden: 6.9%

FY10 general fund balance: $38.8 million (27.6% of revenues)

FY10 available general fund balance: $29.5 million (21.0% of revenues)

PRINCIPAL METHODOLOGY

The principal methodology used in this rating was Piercing the G.O. Ceiling published in December, 2008.

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, and confidential and proprietary Moody's Analytics information.

Moody's Investors Service considers the quality of information available on the credit satisfactory for the purposes of assigning 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.

Please see ratings tab on the issuer/entity page on Moodys.com 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 Investors Service's Credit Ratings were fully digitized and accurate data may not be available. Consequently, Moody's Investors Service 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 our website www.moodys.com for further information.

Please see the Credit Policy page on Moodys.com for the methodologies used in determining ratings, further information on the meaning of each rating category and the definition of default and recovery.

Analysts

Patrick Ford
Analyst
Public Finance Group
Moody's Investors Service

Dan Steed
Backup Analyst
Public Finance Group
Moody's Investors Service

Matthew A. Jones
Senior Credit Officer
Public Finance Group
Moody's Investors Service

Contacts

Journalists: (212) 553-0376
Research Clients: (212) 553-1653


Moody's Investors Service
250 Greenwich Street
New York, NY 10007
USA

MOODY'S DOWNGRADES GLENDALE, ARIZONA'S G.O. AND EXCISE TAX RATINGS; OUTLOOK REVISED TO STABLE FROM NEGATIVE
No Related Data.
© 2022 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. 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 OR IMPAIRMENT. SEE APPLICABLE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS (“ASSESSMENTS”), AND OTHER OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS, AND PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS OR PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.

MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.

All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. 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 or in preparing its Publications.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING, ASSESSMENT, OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.

Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody’s Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $5,000,000. MCO and Moody’s Investors Service also maintain policies and procedures to address the independence of Moody’s Investors Service credit ratings and credit rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody’s Investors Service and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY100,000 to approximately JPY550,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

Moodys.com