MOODY'S LOWERS E-RATED BANKS' SUBORDINATED DEBTS RATINGS: LONG-TERM PROTECTION UNCERTAIN
Tokyo, Feburary 9, 1999 -- Moody's Investors Service confirmed subordinated debt ratings and junior subordinated debt ratings assigned to the securities issued by banks rated E+ bank for financial strength rating, but lowered those of banks with bank financial strength ratings of E. Moody's said that the downgrades of the subordinated debt of very weak banks reflects the uncertainty regarding the regulatory treatment of such obligations in failed bank resolutions in the future, especially after the expiration of the current safety net in 2001. These rating actions conclude Moody's review commenced on June 15, 1998.
Moody's confirmed ratings of Fuji Bank and Sakura Bank, which are both rated E+ for bank financial strength rating. Their subsidiaries' junior obligations were also confirmed accordingly. The confirmed ratings are as follows: the subordinated debt rating at Baa3, the junior subordinated debt rating at Ba1, and the preferred stock rating at "ba1." Details of issuers and their ratings are listed at the end of this release.
However, Moody's downgraded the subordinated debt ratings of three E-rated banks. The ratings of Daiwa Bank and Hokuriku Bank were lowered to Ba3 and B1 for subordinated debt and junior subordinated debt, respectively.
The subordinated debt rating of Mitsui Trust & Banking Co. was also downgraded to Ba2 from Ba1, and the rating remains under review for possible downgrade.
The Caa1 subordinated debt rating of Long-Term Credit Bank of Japan, another E-rated Japanese bank and one of recently nationalized institutions, was confirmed on January 12, 1999, and was not affected by today's rating action.
According to Moody's, the economic capital of E/E+ rated Japanese banks has been substantially impaired, and holders of subordinated debt issued by those institutions may be exposed to risk. In Moody's view, current developments suggest that Japanese financial policy will continue to evolve toward market discipline, and the status of subordinated obligations may be recognized in a more distinctive fashion over the medium term.
The following ratings were confirmed:
Fuji Bank, Limited.
Fuji Bank, Ltd. - the subordinated debt rating at Baa3, the junior subordinated debt rating at Ba1.
Fuji Bank International Finance N.V. - the subordinated debt rating at Baa3, the junior subordinated debt rating at Ba1.
Fuji Finance (Cayman) Limited - the subordinated debt rating at Baa3, the junior subordinated debt rating at Ba1.
Fuji International Finance (Bermuda) Trust - the preferred stock rating at "ba1".
Fuji JGB Investment L.L.C. - the preferred stock rating at "ba1".
Sakura Bank, Limited.
Sakura Bank (Canada) - the subordinated debt rating at Baa3.
Sakura Capital Funding (Cayman) Limited - the junior subordinated debt rating at Ba1.
Sakura Finance (Cayman) Limited - the subordinated debt rating at Baa3.
Sakura Finance (Bermuda) Trust - the preferred stock rating at "ba1".
The following ratings were downgraded:
Daiwa Bank, Limited.
Daiwa International Finance (Cayman) Ltd. - the subordinated debt rating to Ba3 from Ba2.
Daiwa PB Limited - the junior subordinated debt rating to B1 from Ba3.
Hokuriku Bank, Limited.
Hokuriku International Cayman Limited - the subordinated debt rating to Ba3 from Ba2, the junior subordinated rating to B1 from Ba3.
Mitsui Trust & Banking Co., Limited
MTI Capital (Cayman) Limited - the subordinated debt rating to Ba2 from Ba1, remaining under review for possible downgrade.
MTI Finance (Cayman) Ltd. - the subordinated debt rating to Ba2 from Ba1, remaining under review for possible downgrade.
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