Moodys.com
Close
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.
Already a customer?
LOG IN
Don't want to see this again?
REGISTER
OR
Accept our Terms of Use to continue to Moodys.com:

PLEASE READ AND SCROLL DOWN!

By clicking “I AGREE” [at the end of this document], you indicate that you understand and intend these terms and conditions to be the legal equivalent of a signed, written contract and equally binding, and that you accept such terms and conditions as a condition of viewing any and all Moody’s inform​ation that becomes accessible to you [after clicking “I AGREE”] (the “Information”).   References herein to “Moody’s” include Moody’s Corporation, Inc. and each of its subsidiaries and affiliates.

Terms of One-Time Website Use

1.            Unless you have entered into an express written contract with Moody’s to the contrary, you agree that you have no right to use the Information in a commercial or public setting and no right to copy it, save it, print it, sell it, or publish or distribute any portion of it in any form.               

2.            You acknowledge and agree that Moody’s credit ratings: (i) are current opinions of the future relative creditworthiness of securities and address no other risk; and (ii) are not statements of current or historical fact or recommendations to purchase, hold or sell particular securities.  Moody’s credit ratings and publications are not intended for retail investors, and it would be reckless and inappropriate for retail investors to use Moody’s credit ratings and publications when making an investment decision.  No warranty, express or implied, as the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any Moody’s credit rating is given or made by Moody’s in any form whatsoever.          

3.            To the extent permitted by law, Moody’s and its directors, officers, employees, representatives, licensors and suppliers disclaim liability for: (i) any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with use of the Information; and (ii) any direct or compensatory damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud or any other type of liability that by law cannot be excluded) on the part of Moody’s or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with use of the Information.

4.            You agree to read [and be bound by] the more detailed disclosures regarding Moody’s ratings and the limitations of Moody’s liability included in the Information.     

5.            You agree that any disputes relating to this agreement or your use of the Information, whether sounding in contract, tort, statute or otherwise, shall be governed by the laws of the State of New York and shall be subject to the exclusive jurisdiction of the courts of the State of New York located in the City and County of New York, Borough of Manhattan.​​​

I AGREE
Rating Action:

MOODY'S DOWNGRADES THE RATINGS OF QUESTAR CORP. AND ITS SUBSIDIARIES (QUESTAR GAS COMPANY AND QUESTAR PIPELINE COMPANY TO A2 SENIOR UNSECURED)

12 Nov 2002
MOODY'S DOWNGRADES THE RATINGS OF QUESTAR CORP. AND ITS SUBSIDIARIES (QUESTAR GAS COMPANY AND QUESTAR PIPELINE COMPANY TO A2 SENIOR UNSECURED)

Approximately $965 Million of Debt Securities Affected.

New York, November 12, 2002 -- Moody's Investors Service downgraded the ratings of Questar Corporation (Questar, the parent) and its subsidiaries Questar Gas Company, Questar Pipeline Company, and Questar Market Resources. The rating outlook is stable for all rated Questar entities. The following ratings were downgraded with a stable outlook:

Questar Corp.: Commercial paper rating from Prime-1 to Prime-2;

Questar Gas Co.: Senior unsecured rating from A1 to A2;

Questar Pipeline Co.: Senior unsecured rating from A1 to A2;

Questar Market Resources: Senior unsecured rating from Baa2 to Baa3.

These rating actions reflect: 1) the weaker debt coverage measures of its regulated businesses compared to its peers'; 2) increasing exposure to the risks of non-regulated oil and gas exploration and production (E&P); 3) moderately high leverage and future capital needs that may forestall further debt reduction; and 4) the challenges of being geographically concentrated in the Rocky Mountain region, where gas production activity and prices are prone to boom-and-bust cycles.

The stable outlook assumes that Questar will use the proceeds received from recently announced events ($105.5 million of proceeds from the favorable resolution of the TransColorado litigation and $106.5 million from the sale of Canadian E&P assets) to moderate its leverage. The outlook also assumes Questar Gas's ongoing rate case will be settled within expected ranges. Moody's expects that Questar's capital spending will moderate after the record hit in 2001. However, the company's ratings may be pressured if capital expenditures remain significantly higher than internally generated cash flows, deterring a reduction in leverage. Questar's ratings anticipate event risk longer term. Every few years in its recent history, Questar has made a sizable E&P acquisition. That pattern may well continue, so that its leverage could stay above its long-term target of 40%-45% consolidated debt-to-capital.

Questar Corporation is a holding company with no operating assets of its own. Questar serves as a vehicle to provide short-term loans and equity to help finance the operations and investments of its subsidiaries. However, its material subsidiaries are largely self-financing for regulatory clarity. They include two regulated subsidiaries -- Questar Gas Company, engaged in gas distribution, and Questar Pipeline Company, engaged in interstate gas transmission. Questar's unregulated businesses are housed primarily in Questar Market Resources (QMR), an intermediate holding company, whose subsidiaries engage in both E&P, gas gathering and processing, and energy marketing. Another subsidiary Wexpro develops and produces reserves owned by Questar Gas pursuant to a contractual agreement. Questar provides no guarantee or any other form of explicit support for any of these fully owned subsidiaries.

On a consolidated basis, Questar Corporation's leverage is moderately high (52% pro forma at September 30, 2002, adjusted for over $200 million of expected near-term debt reduction). Cash flow is sound (21% retained cash flow-to-debt for last twelve months ended September 30), reflecting in large part the cash flows generated by its regulated and unregulated E&P businesses. Similarly, the ratio of funds flow from operations-to-fixed charges was over five times. Moody's notes however that, while Questar's E&P operations generate flush cash flow, they also require heavy ongoing reinvestment to offset the natural decline in its reserve base.

The Prime-2 commercial paper rating of the Questar parent company factors in the credit strength of its operating subsidiaries and the structural subordination to $1.3 billion of their external debt. On a standalone basis, each of Questar's operating subsidiaries is modestly sized and has credit qualities that are below industry averages in some respects. However, their ratings reflect the benefit of integration with each other.

The A2 rating of Questar Pipeline (25% of last twelve months' consolidated operating income as of September 30) reflects its high leverage and weak debt coverage measures. Although these risks are mitigated by the imminent debt paydown and earnings pressure elimination from its sale of its underperforming TransColorado joint venture, Moody's expects that its interest coverage and cash flow coverage of debt will be weaker than many of its peers'. For the last twelve months ended September 30, pro forma the $105.5 million TransColorado sale, its EBITDA-to-gross interest was 3.2 times, retained cash flow-to-debt was 11%, and debt-to-capital was 60%.

In recent years, Questar Pipeline undertook a number of expansion projects that entailed large outlays. These large projects burdened the Pipeline with debt, while lower than expected earnings from these investments (including the TransColorado and Southern Trail projects) have caused its return-on-assets to erode from 10% a few years ago to 8.5% currently. The sale of Questar's interests in TransColorado under the above-mentioned settlement will lessen the pressure on returns. Capital expenditures are expected to decrease following the completion of its $100 million Southern Trail project this past June. However, the magnitude of the spending reduction is uncertain, as the Pipeline has numerous smaller projects that could be undertaken if there is enough shipper interest. Moody's notes that while Pipeline's budget is largely discretionary (its maintenance capex is in line with its depreciation expense), spending could remain high if those proposed projects are undertaken, and this could delay strengthening in the company's leverage and return measures.

The A2 rating of Questar Gas (25% of last twelve months' operating income as of September 30) reflects returns that are below its authorized returns and also the industry average; it also reflects weak earnings coverages. However, its has maintained leverage at about 50%, in line with industry norms and at about its allowed equity ratio. Questar Gas is relatively mature compared to its sister companies. Nevertheless, it has a higher customer growth rate than the average US gas distribution company. Although the growth is moderating, it has made regulatory lag a persistent issue. Its return-on-equity was 9% for the last twelve months ended September 30, well below its 11% authorized return and average for the industry. It has filed for a general rate increase in Utah with settlement expected to be announced in the near-term. We assume in our rating that the settlement results in a revenue increase that would at minimum help to prevent a further weakening in its returns and coverages (EBIT/interest at 2.8 times for the last twelve months ended September 30).

The Baa3 rating of QMR (roughly 50% of last twelve months' operating income) reflects the depleting nature of its oil and gas reserve assets and the substantial reinvestment they require; the regional commodity price risks related to its non-regulated E&P business as well as the gathering/processing and marketing businesses that support it; the modest size of its reserve base; and the risk from being geographically concentrated in the Rockies. QMR's investment grade rating, however, also takes into consideration a measure of stability provided by the regulated E&P business of its Wexpro subsidiary and the benefit of its affiliation with the Questar organization through various commercial arrangements.

Non-regulated E&P comprises over half of QMR's operating income and over a quarter of Questar's consolidated. With proved reserves of 184 MMBOE (non-regulated reserves, pro forma the sale of Canadian assets), QMR is the smallest among investment grade-rated independent E&P companies. QMR's three-year average finding and development costs ($4/BOE range, for all sources) are competitive against other independent E&P companies. However, reserve replacement costs have been rising. This trend may continue as the company develops its substantial inventory of proven undeveloped reserves. However, QMR is moderately leveraged compared to reserves (debt/total proved BOE at about $2 and debt/proved developed reserves at about $3.50, excluding Wexpro and pro forma the sale of the Canadian assets); has a relatively long reserve life (12 years total proved and 7 years proved developed); has consistently replaced at least 100% of its reserves through the drillbit; and has enjoyed a high drilling success rate.

Located far from major consuming markets and having limited pipeline takeaway capacity, Rockies gas production tends to be particularly prone to boom-and-bust cycles. In the second and third quarters of 2002, basis differentials in the Rockies widened to a record high in seven years. Questar's recent results have been suppressed by lower realized prices on unhedged production and curtailed production from wells that were shut in. Promising developments are attracting more producers to this region. This may fuel gas-on-gas competition that could cause the chronic regional oversupply and weak prices to persist. Moody's notes that 26% of QMR's non-regulated reserves and 37% of non-regulated production are located in the Mid-Continent where price volatility is more moderate.

Questar's practice of hedging the majority of its production from proven developed wells helps to mitigate its price risk (about 40% of its forecast non-regulated proven developed gas production is hedged at prices above recent depressed Rockies spot prices through 2003). Moody's will monitor QMR's ability to weather the low Rockies gas prices that it has experienced recently and which could recur, and also its ability to better realize the value of the company's inventory of proved undeveloped reserves in the Uinta Basin and the Pinedale Anticline in the Rockies, where the company has been devoting much of its resources. As Questar's vehicle for earnings growth, QMR will continue to be the focus of Moody's scrutiny. Acquisition event risk is most likely at QMR, as the company may consider stepping out from its existing reserve holdings in the Rockies.

Moody's notes that about 40% of QMR's operating income and 20% of Questar's consolidated are generated by E&P operations that are governed by the Wexpro Settlement Agreement. Wexpro adds a measure of stability to QMR's credit profile and provides strong cash flows and returns. Under this agreement, Wexpro (a subsidiary of QMR) is allowed to recover operating expenses related to producing oil and gas from certain properties formerly owned by Questar Gas Company. In a utility-like fashion, Wexpro earns a specified return on its investment base. This return calculation includes no commodity price factor; rather, it is based on a basket of regulated utilities' returns. In 2001, Wexpro's after-tax return was 19.7%, much higher than its sister companies'. Income from oil sales in excess of cost recovery and return on investment is shared by Wexpro and Questar Gas, which uses those amounts to reduce its customers' natural gas costs.

Moody's notes that, longer term, the Wexpro Agreement may subject to legislative and regulatory risk. There could be a reconsideration of the provisions under that Agreement, for example, if market prices for gas persist at lower levels than prices provided by Wexpro for an extended period of time. Moody's views this risk as low, given Wexpro's long history of providing low-cost gas supply and satisfactory reviews by regulatory agencies.

Although not explicitly supported, QMR's investment grade rating assumes that Questar will support QMR as a strategic growth vehicle and a key component of its integrated business model. Covenants in QMR's bank agreement and bond indenture ensure Questar's support. Questar ceasing to fully own QMR constitutes an event of default under QMR's bank agreement. QMR's indenture allows bondholders to put their bonds to the company should QMR be downgraded to below investment grade after Questar ceases to be its majority owner.

While the ratings of Questar entities reflect their individual credit qualities, they also reflect their interdependence on one another. Much of the Questar organization - in particular, Questar Gas, Questar Pipeline, Wexpro, and Questar Gas Management (a small gathering and processing subsidiary of QMR) -- operates as an integrated unit, with each subsidiary representing a link in the gas value chain. These subsidiaries benefit from this vertical integration by drawing much of their revenues from each other. Except for its non-regulated E&P subsidiaries, the affiliates are the largest customers of the major Questar subsidiaries. For example, Questar Gas is by far the largest shipper on Questar Pipeline. Questar Gas purchases about half of its gas supply from Wexpro. Affiliates account for roughly two-thirds of the revenues at QMR's gathering and processing affiliate. QMR's small marketing operations also exist primarily to sell its affiliates' oil and gas production.

Much of affiliate revenues is underpinned by long-term contracts. Two such contracts - the Wexpro agreement (between Questar Gas and Wexpro) and the gas gathering agreement (between Questar Gas and Questar Gas Management) -- have been sanctioned by state regulators to help supply Questar Gas with natural gas. These agreements allow these QMR subsidiaries to earn a regulated return on certain E&P and gathering and processing activities and provide a platform of stable earnings on which QMR can build its unregulated E&P business.

The significant amount of capital required by each of Questar's major subsidiaries could deter debt reduction. Questar Gas must extend mains to meet customer growth, which, at above 2%, exceeds the national average. Questar Pipeline has invested heavily in recent years to build pipeline infrastructure to support the recent development activity in the Rockies. Although Questar Pipeline has no large capital projects on the horizon, meaningful amounts may still be spent on a number of smaller projects to better capture the value of its existing assets. QMR will account for most of Questar's capital expenditures. It has a large portfolio of undeveloped gas reserves (roughly 40% of non-regulated E&P proven reserves is undeveloped, pro forma the Canadian asset sale), which require upfront investment before they become productive.

Absent another major acquisition, Questar has no plans to issue common stock in the near-term. (Questar has a universal shelf registration that would enable it to issue equity to help finance such an acquisition.) The company is likely to favor means other than equity issuances -- asset sales, capex reduction, internal equity formation - to reduce its debt. For example, Questar's goal to reduce the debt incurred in its $403 million acquisition of Shenandoah Energy, Inc. in 2001 (Questar's biggest acquisition to date) will be met over the coming months by the sale of its E&P assets in Canada and elsewhere and proceeds won in the TransColorado litigation. The application of these proceeds toward debt reduction will reduce its leverage from the high of 59% at year-end 2001 to about 52% pro forma based on its September 30, 2002 balance sheet. This is a meaningful reduction; however, additional measures would need to be taken to reach debt levels within its target debt range and that are more in line with its former rating.

Questar's business risks have grown along with large investments in businesses outside its regulated gas distribution and transmissions businesses. Over the past few years, regulated assets have declined slightly as a percentage of Questar's consolidated assets, but they still comprise a majority 58%, including 24% for Questar Gas, 27% for Questar Pipeline, and 7% for Wexpro. On the other hand, investment in non-regulated businesses at QMR (most of which is E&P) has increased faster than any other segment, much of it due to Questar's Shenandoah Energy acquisition. Increased investment in less stable businesses, in particular non-regulated E&P, presages more volatility in future earnings.

Questar Corporation is a diversified natural gas company headquartered in Salt Lake City, Utah.

New York
John Diaz
Managing Director
Corporate Finance
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Mihoko Manabe
Vice President - Senior Analyst
Corporate Finance
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

No Related Data.
© 2019 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 INVESTORS SERVICE, INC. AND ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MOODY’S PUBLICATIONS MAY INCLUDE 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 OR IMPAIRMENT. SEE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY’S 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. CREDIT RATINGS AND MOODY’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S 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 AND MOODY’S 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 OR MOODY’S 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.

CREDIT RATINGS AND MOODY’S 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 the Moody’s 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 OR 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 rating, agreed to pay to Moody’s Investors Service, Inc. for ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and MIS also maintain policies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS 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 rating, agreed to pay to MJKK or MSFJ (as applicable) for ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.

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

​​​​​​
Moodys.com