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 affirms EPM's Baa3 rating; outlook remains positive

18 Apr 2016

Approximately USD 1.2 billion rated debt impacted.

New York, April 18, 2016 -- Moody's Investors Service (Moody's) affirmed today the Baa3 Issuer and senior unsecured ratings of Empresas Publicas de Medellin S.A. E.S.P. (EPM). The outlook remains positive.

RATINGS RATIONALE

"Today's rating action is largely prompted by Moody's assessment of EPM's satisfactory liquidity profile" said Natividad Martel, Moody's Vice-President - Senior Analyst. "Moody's believes that EPM's USD1.0 billion delayed syndicated term loan facility will allow the company to comfortably cope this year with the increased costs resulting from the combination of the extended outage at its 560MW Guatape hydro-electric plant and the financial impact of the tail-end of the severe El Niño phenomena currently affecting Colombia".

Today's rating action also takes into consideration that both of these events will significantly reduce EPM's operating cash flows as well as increase its financial leverage as it funds all its capital requirements during 2016. Pending a final assessment after Guatape fully resumes operations later this year, EPM estimates the total costs from this incident could hover around US$200 million including physical damages of around US$25 million. This will result in a material deterioration in EPM's key credit metrics, such as its Funds from Operations (FFO) to debt which will decline to the low teens level on a standalone and consolidated basis. However, the rating action also factors in EPM's existing business interruption insurance coverage as well as Moody's expectation that key credit metrics will return in 2017 to levels more commensurate with the Baa-rating category, including FFO to debt of at least 20%, on a standalone and consolidated basis.This expectation is underpinned by the anticipated improvement in EPM's cash flows as the Guatape plant progressively resumes operations during 2016 along with the expected return to at least average hydrology levels in Colombia after the forecasted end of El Niño in May of this year. Importantly, today's rating action is predicated on EPM's expectation that the insurance coverage will allow for the recovery of the majority of the costs caused by the Guatape incident as well as the commitment by EPM's management to reduce its outstanding financial leverage during 2017 to improve credit metrics.

This commitment is important because it will allow EPM to comply at year-end 2017 with the financial leverage covenant embedded in three of its loan documentations which caps consolidated debt to EBITDA to 3.5x (as per the documentation definition). Compliance with this covenant is calculated on a maintenance basis rather than as an incurrence test. EPM attained in March the waivers from these financial institutions, mostly multi-laterals, after recording a consolidated debt to EBITDA of 3.76x at year-end 2015. Importantly, today's rating action incorporates Moody's understanding that EPM is in negotiations with those lenders to attain waivers for 2016 and/or temporarily increase the 3.5x-debt-to EBITDA covenant threshold. Not seeking a permanent amendment of the threshold is important because it supports management's commitment to meet this credit metric on a sustainable basis despite approaching the tail-end of the Ituango plant construction.

LIQUIDITY

EPM's current satisfactory liquidity situation is underpinned by the proceeds available under the 5-year US$1 billion delayed syndicated term loan facility that EPM executed at the end of last year with a consortium of international banks. Moody's liquidity assessment also considers the authorization attained by the company in March to sell its 13%-ownership stake in ISAGEN S.A. E.S.P. (Baa3 stable). EPM expects to close this sale during the second quarter of 2016 and estimates the net proceeds could approximate COP1,335,000 million (currently equivalent to around US$440million). Importantly, Moody's understands that the Municipality of Medellin (Baa2 stable) has agreed to defer the receipt of its expected portion of the sale proceeds in annual installments between 2017-2019, in the aggregate amount of COP600,000 million. This is credit positive, as it evidences the Municipality's support of its wholly-owned subsidiary EPM. Moody's assessment also considers that at year-end 2015, EPM reported on a standalone basis COP542,781 million (equivalent to about US$180 million) in cash and short-term investments. EPM's capital requirements during 2016 primarily include the funding of its planned investments (around US$1 billion) largely related to the construction of the 2,400 MW Ituango hydro-electric plant (current progress: 38.1%; total capex: US$5 billion which leaves around COP 7,000,000 million currently equivalent to approximately US$2.5 billion remaining to be invested) as well as planned dividend distributions to the Municipality that will aggregate around COP543,000 million (approximately US$200 million). EPM anticipates receiving the business interruption insurance proceeds related to the Guatape incident at the latest in 2017 which when combined with the expected improvement in operating cash flows and the anticipated repayment by its subsidiaries of intercompany loans (COP 465,000 million; around US$155 million), will allow EPM's management to meet its commitment to reduce indebtedness and improve its reported credit metrics.

Today's rating action also factors in EPM's management of the group's exposure to foreign exchange risk. EPM's management estimates that the combination of natural and financial hedges will allow the issuer to reduce its cash exposure to potential changes in foreign exchange risk to less than 20% in 2016 and 2017, while for 2018 it currently anticipates recording a cash exposure slightly below 30%.

EPM's Baa3 rating reflects its ownership structure and linkages with the Municipality of Medellin. Given it is fully owned by the Municipality, EPM falls under the scope of Moody's rating methodology for government-related issuers (GRIs). Its application underpins EPM's current Baa3 senior unsecured rating which results from the following four input factors (i) our estimates of a high level of dependence between the company and the Municipality, (ii) a strong-level probability of extraordinary support from the Municipality in the case of financial distress, (iii) the sub-sovereign rating of the Municipality (Baa2, stable) and (iv) EPM's Baseline Credit Assessment (BCA) of ba1. The BCA is a representation of the group's intrinsic creditworthiness before taking into account possible extraordinary support from the sub-sovereign.

EPM's BCA of ba1 and positive outlook reflect the group's geographic and operational diversity but also the fact that EPM has incurred the bulk of the indebtedness at the parent level and generates the bulk of the group's cash flows. It acknowledges the diversity of EPM's business risk profile based on the combination of its unregulated power generation (historically around 60% of its EBITDA) and regulated water, natural gas and electric distribution and transmission operations (around 40%). The latter operations clearly enhance EPM's cash flow visibility. It also considers EPM's historical track-record of a prudent commercial policy albeit the current El Niño has challenged its effectiveness; however, Moody's also acknowledges the severity of the current weather-phenomena. The rating also factors in the 2007 Governance Framework Agreement that outlines EPM's relationship with the Municipality of Medellin and limits its dividend distributions to 55% of the previous year's distributable net income. It also reflects the expectation that the first phase of Ituango will start operations as scheduled between December 2018 (first unit) and during 2019 (three additional units) with the four remaining units coming online (additional 1,200MW capacity) between 2021 and mid-2022. The BCA of ba1 and positive outlook also assume that EPM will continue pursuing its Mega 2022 growth initiatives only after the Guatape incident is fully resolved and that these expansion plans will be prudently managed and financed.

For more details refer to the Credit Opinion published in our website.

What Could Change the Rating -- DOWN

While not currently anticipated given the positive outlook, the rating outlook could be stabilized and/or the BCA and senior unsecured rating could be downgraded if: EPM fails to resume operations at the Guatape units as currently scheduled with two units in May followed by another two units in June and the rest (four) between July and September. Negative rating action is also likely if EPM does not receive the proceeds from its insurance coverage next year and/or if that coverage does not cover the vast majority of its physical and operational costs as currently anticipated. A stabilization of the outlook and/or rating downgrade is likely if EPM fails to reduce its outstanding financial leverage using the proceeds from the insurance coverage and from ADASA's intercompany loan repayment. Negative momentum on the outlook and/or rating is likely if EPM's management is unable to implement its planned hedges or its exposure to foreign exchange risk is higher than currently expected. A negative rating action could also be triggered if the Ituango hydro project and/or any new expansion targets are poorly executed and/or result in the implementation of financial policies that are deemed imprudent, such that indebtedness increases significantly above anticipated levels resulting in EPM's not being able to improve its standalone and consolidated key credit metrics such that they become commensurate again with the Baa-rating category under Moody's Unregulated Utilities and Power Companies methodology, on a sustainable basis. Quantitatively, a negative rating action could be triggered if Moody's expects EPM's interest coverage and FFO to debt to remain below 4.0x and 20%, respectively, on a sustained basis. Apart from a change in the standalone fundamental credit quality of the issuer, a significant deterioration of the financial strength of the City of Medellin or a downgrade in Colombia's foreign currency ceiling could negatively affect EPM's ratings and outlook.

What Could Change the Rating - UP

EPM's rating could be upgraded if the issuer improves its key credit metrics such that they become again commensurate with the low-end of the Baa-rating category, on a sustainable basis, particularly as it approaches the commission of first phase of the Ituango project. Specifically, if Moody's expects FFO to debt and Retained Cash Flow to debt (RCF) in the very high and mid-teens, respectively, as well as interest coverage above 4x. This also assumes continued smooth progress in the construction of the Ituango hydro project in terms of schedule and budget as well as other external growth initiatives pursued under its Mega 2022 expansion strategy after the resolution of the Guatape incident that are financed in a prudent manner. Apart from any change in the standalone fundamental credit quality of EPM, the unsecured debt rating could be upgraded if the rating of the City of Medellin is upgraded.

The methodologies used in these ratings were Unregulated Utilities and Unregulated Power Companies published in October 2014, and Government-Related Issuers published in October 2014. Please see the Ratings Methodologies page on www.moodys.com for a copy of these methodologies.

Headquartered in Medellin, Colombia (Baa2 stable), Empresas Publicas de Medellin, E.S.P. (EPM) is a multi-utility vertically integrated public service group with 3,513MW installed capacity (hydro: 85.6%). In Colombia, EPM provides directly or indirectly via its subsidiaries electric distribution, generation, transmission, and commercialization services (energy business unit) to over three million customers as well as natural gas distribution and commercialization services to around one million end-users. EPM's water business unit renders water and sewage services (water business unit) to approximately one million customers while the company also provides waste management services in the Antioquia region via its wholly-owned subsidiary, Emvarias. EPM also controls electric regulated utilities in Guatemala, El Salvador and Panama as well as water related subsidiaries in Mexico and Chile where EPM also wholly-owns the 110MW Cucurus wind-farm.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this rating action, and whose ratings may change as a result of this rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Natividad Martel
Vice President - Senior Analyst
Infrastructure Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

William L. Hess
MD - Utilities
Infrastructure Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's affirms EPM's Baa3 rating; outlook remains positive
No Related Data.
© 2021 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 JPY125,000 to approximately JPY550,000,000.

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