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Rating Action:

Moody's affirms eight classes of CD 2016-CD1 Mortgage Trust

26 May 2020

Approximately $577.6 million of structured securities affected

New York, May 26, 2020 -- Moody's Investors Service, ("Moody's") has affirmed the ratings on eight classes in CD 2016-CD1 Mortgage Trust:

Cl. A-1, Affirmed Aaa (sf); previously on Aug 10, 2018 Affirmed Aaa (sf)

Cl. A-2, Affirmed Aaa (sf); previously on Aug 10, 2018 Affirmed Aaa (sf)

Cl. A-SB, Affirmed Aaa (sf); previously on Aug 10, 2018 Affirmed Aaa (sf)

Cl. A-3, Affirmed Aaa (sf); previously on Aug 10, 2018 Affirmed Aaa (sf)

Cl. A-4, Affirmed Aaa (sf); previously on Aug 10, 2018 Affirmed Aaa (sf)

Cl. A-M, Affirmed Aa3 (sf); previously on Aug 10, 2018 Affirmed Aa3 (sf)

Cl. B, Affirmed A2 (sf); previously on Aug 10, 2018 Affirmed A2 (sf)

Cl. X-A*, Affirmed Aa1 (sf); previously on Aug 10, 2018 Affirmed Aa1 (sf)

* Reflects interest-only classes

RATINGS RATIONALE

The ratings on the seven principal and interest (P&I) classes were affirmed because the transaction's key metrics, including Moody's loan-to-value (LTV) ratio, Moody's stressed debt service coverage ratio (DSCR) and the transaction's Herfindahl Index (Herf), are within acceptable ranges.

The rating on the interest-only Class X-A was affirmed based on the credit quality of the referenced classes.

Our analysis has considered the effect of the coronavirus outbreak on the US economy as well as the effects that the announced government measures, put in place to contain the virus, will have on the performance of commercial real estate. Stress on commercial real estate properties will be most directly stemming from declines in hotel occupancies (particularly related to conference or other group attendance) and declines in foot traffic and sales for non-essential items at retail properties.

The contraction in economic activity in the second quarter will be severe and the overall recovery in the second half of the year will be gradual. However, there are significant downside risks to our forecasts in the event that the pandemic is not contained and lockdowns have to be reinstated. As a result, the degree of uncertainty around our forecasts is unusually high. We regard the coronavirus outbreak as a social risk under our ESG framework, given the substantial implications for public health and safety.

Moody's rating action reflects a base expected loss of 5.7% of the current pooled balance, compared to 4.6% at Moody's last review. Moody's base expected loss plus realized losses is now 5.5% of the original pooled balance, compared to 4.5% at the last review. Moody's provides a current list of base expected losses for conduit and fusion CMBS transactions on moodys.com at http://www.moodys.com/viewresearchdoc.aspx?docid=PBS_SF215255.

FACTORS THAT WOULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS:

The performance expectations for a given variable indicate Moody's forward-looking view of the likely range of performance over the medium term. Performance that falls outside the given range can indicate that the collateral's credit quality is stronger or weaker than Moody's had previously expected.

Factors that could lead to an upgrade of the ratings include a significant amount of loan paydowns or amortization, an increase in the pool's share of defeasance or an improvement in pool performance.

Factors that could lead to a downgrade of the ratings include a decline in the performance of the pool, loan concentration, an increase in realized and expected losses from specially serviced and troubled loans or interest shortfalls.

METHODOLOGY UNDERLYING THE RATING ACTION

The methodologies used in rating all classes except interest-only classes were "Approach to Rating US and Canadian Conduit/Fusion CMBS" published in May 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1226187 and "Moody's Approach to Rating Large Loan and Single Asset/Single Borrower CMBS" published in May 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1227875 . The methodologies used in rating interest-only classes were "Approach to Rating US and Canadian Conduit/Fusion CMBS" published in May 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1226187, "Moody's Approach to Rating Large Loan and Single Asset/Single Borrower CMBS" published in May 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1227875 , and "Moody's Approach to Rating Structured Finance Interest-Only (IO) Securities" published in February 2019 and available at https://www.moodys.com/research/Moodys-Approach-to-Rating-Structured-Finance-Interest-Only-IO-Securities--PBS_1111179. Please see the list of ratings at the top of this announcement to identify which classes are interest-only (indicated by the *). Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of these methodologies.

DEAL PERFORMANCE

As of the May 12, 2020 distribution date, the transaction's aggregate certificate balance has decreased by 2.9% to $683.1 million from $703.2 million at securitization. The certificates are collateralized by 32 mortgage loans ranging in size from less than 1% to 9.5% of the pool, with the top ten loans (excluding defeasance) constituting 67.1% of the pool. Four loans, constituting 28.5% of the pool, have investment-grade structured credit assessments.

Moody's uses a variation of Herf to measure the diversity of loan sizes, where a higher number represents greater diversity. Loan concentration has an important bearing on potential rating volatility, including the risk of multiple notch downgrades under adverse circumstances. The credit neutral Herf score is 40. The pool has a Herf of 18, the same as at Moody's last review.

As of the May 2020 remittance report, loans representing 87% were current or within their grace period on their debt service payments and 13% were beyond their grace period but less than 30 days delinquent.

Seven loans, constituting 14.7% of the pool, are on the master servicer's watchlist, of which all of these loans indicate the borrower has requested relief in relation to coronavirus impact on the property. The watchlist includes loans that meet certain portfolio review guidelines established as part of the CRE Finance Council (CREFC) monthly reporting package. As part of Moody's ongoing monitoring of a transaction, the agency reviews the watchlist to assess which loans have material issues that could affect performance.

No loans have been liquidated from the pool and one loan, constituting 0.8% of the pool, is currently in special servicing. The specially serviced loan is the Holiday Inn Express Cocoa Beach Loan ($5.7 million -- 0.8% of the pool), which is secured by a 60-room limited service hotel in Cocoa Beach, Florida. The loan recently transferred to the special servicer in May 2020 and is currently paid through its April 2020 payment. As of year-end 2019 the property had reported increasing revenue since securitization and the 2019 reported NOI DSCR was 3.50X. Due property's prior performance, the loan was included in the conduit statistics.

Moody's assumed a high default probability for two poorly performing loans, constituting 4.5% of the pool. The largest troubled loan is the Hilton Garden Inn San Leandro Loan ($19.7 million -- 2.9% of the pool), which is secured by a 119-room full-service hotel located in San Leandro, California. The loan was placed on the watchlist in May 2020 for a relief request as a result of the coronavirus outbreak. The property's historical improvement rebounded in 2019 after annual declines in net operating income (NOI), however, the 2019 NOI was still slightly below underwritten levels. The other troubled loan is the Kahana Retail Loan ($11.3 million -- 1.7% of the pool), which is secured by an approximately 32,000 SF retail center located in Lahaina, Hawaii. The loan was placed on the watchlist in November 2019 due to a decline in debt service coverage ratio (DSCR) and servicer commentary in May 2020 inidicated relief was requested as a result of the coronavirus outbreak.

Moody's received full year 2018 operating results for 100% of the pool, and full or partial year 2019 operating results for 100% of the pool (excluding specially serviced and defeased loans). Moody's weighted average conduit LTV is 123%, the same as at Moody's last review. Moody's conduit component excludes loans with structured credit assessments, defeased and CTL loans and troubled loans. Moody's net cash flow (NCF) reflects a weighted average haircut of 25.1% to the most recently available net operating income (NOI). Moody's value reflects a weighted average capitalization rate of 10.4%.

Moody's actual and stressed conduit DSCRs are 1.43X and 0.93X, respectively, compared to 1.48X and 0.94X at the last review. Moody's actual DSCR is based on Moody's NCF and the loan's actual debt service. Moody's stressed DSCR is based on Moody's NCF and a 9.25% stress rate the agency applied to the loan balance.

The largest loan with a structured credit assessment is the 10 Hudson Yards Loan ($65.0 million -- 9.5% of the pool), which represents a pari-passu portion of a $708.1 million mortgage loan. The asset is also encumbered by $191.9 million of subordinate debt and $300.0 million of mezzanine debt. The loan is secured by a newly constructed, 52-story, mixed-use tower featuring approximately 1.8 million square feet (SF) of office, retail, and storage space. The property is located on the northwest corner of 10th Avenue and 30th Street in New York, New York. Amenities at the property include a food hall, event space, an outdoor terrace, and a 230-space parking structure. The five largest tenants at 10 Hudson Yards are Coach, Inc. (30% of net rentable area (NRA)), L'Oreal (22% of NRA), Boston Consulting Group (11% of NRA), SAP America (8% of NRA), and Intersection (4% of NRA). As of December 2019, the property was 100% leased, up from 99% in 2018 and 93% at securitization. The loan is interest-only through its entire term and Moody's structured credit assessment and stressed DSCR are aa3 (sca.pd) and 1.27X, respectively, the same as at the last review.

The second largest loan with a structured credit assessment is the Westfield San Francisco Centre Loan ($60.0 million -- 8.8% of the pool), which represents a pari-passu portion of a $433.1 million mortgage loan. The asset is also encumbered by subordinate debt of $124.9 million. The loan is secured by an approximately 795,000 SF component of a 1.4 million SF super-regional mall and office development located in San Francisco, California. The non-collateral retail anchor tenants are Bloomingdales and Nordstrom and the collateral anchor tenant is a nine-screen Century Theatre (7% of NRA). The largest office tenants include San Francisco State University (16% of NRA) and Crunchyroll (9% of NRA). As of December 2019, the collateral was 90% occupied and the total property was 95% occupied compared to collateral occupancy of 92% in 2018 and 96% at securitization. The loan is interest-only through its entire term. The property's reported 2019 NOI has declined from securitization due to both lower rental revenue and higher operating expenses and the center is currently closed as a result of the coronavirus outbreak. The property is the dominant retail center in the highly built-out and competitive Union Square submarket of San Francisco. Moody's structured credit assessment and stressed DSCR are baa2 (sca.pd) and 1.11X, respectively, compared to a2 (sca.pd) and 1.26X at the last review.

The third largest loan with a structured credit assessment is the Gas Company Tower & World Trade Center Loan ($40.0 million -- 5.9% of the pool), which represents a pari-passu portion of a $144.0 million mortgage loan. The asset is also encumbered by subordinate debt of $104.0 million and mezzanine debt of $131.0 million. The loan is secured by a 50-story office building, 979-stall on-site parking garage, and 1,186 stall off-site parking located in downtown Los Angeles, California. The property is a 1.37 million SF office tower that was built in 1991 and has undergone periodic updates since development. The largest tenants include Southern California Gas Company (30% of NRA), Sidley Austin (10% of NRA), Latham & Watkins (10% of NRA), and Deloitte (8% of NRA) each having lease expiration dates in 2023 or later. As of December 2019, the property was 86% occupied, compared to 87% in 2018, and 83% at securitization. The loan is interest-only through its five-year term and Moody's structured credit assessment and stressed DSCR are aa2 (sca.pd) and 1.77X, respectively, the same as at the last review.

The fourth largest loan with a structured credit assessment is the Vertex Pharmaceuticals HQ Loan ($30.0 million -- 4.4% of the pool), which represents a pari-passu portion of a $425.0 million mortgage loan. The asset is also encumbered by mezzanine debt of $195.0 million. The loan is secured by a two-building, Class-A office complex located in the Seaport District of Boston, Massachusetts. The 15-story buildings were built-to-suit between 2011 and 2013 to serve as corporate headquarters for Vertex Pharmaceutical Incorporated. Both buildings have achieved LEED Gold certification. Vertex leases 96% of the office, lab, and mechanical space (approximately 1.1 million SF) through December 2028. In addition, the property consists of approximately 51,000 SF of ground floor retail and associated storage space leased to multiple tenants. As of December 2019, the property was 100% occupied, unchanged since securitization. Due to the significant tenant concentration, Moody's value incorporated a lit/dark analysis. The loan is interest-only through its entire term and provides for a hyper-amortization feature that is triggered upon an Anticipated Repayment Date (ARD) in 2026. Moody's structured credit assessment and stressed DSCR are aa2 (sca.pd) and 1.52X, respectively, the same as at the last review.

The top three conduit loans represent 23.1% of the pool balance. The largest loan is the Fiserv at 2900 Westside Loan ($64.2 million -- 9.4% of the pool), which is secured by the leasehold interest in two, six-story, office buildings located in Alpharetta, Georgia, approximately 23 miles north of the Atlanta central business district (CBD). To obtain and maintain certain real property tax abatements, the predecessor to the borrower entered into a municipal bond structure with the local development authority, exchanging fee interest in the property for leasehold interest and certain municipal bonds. The borrower is entitled to purchase fee interest back any time prior to December 31, 2025 in exchange for ending the tax abatement structure. Both buildings were constructed in 2001 for a total of 376,351 SF and connected by a 17,773 SF lobby and a sky bridge. Property amenities include a fitness center, cafeteria, covered parking, wifi throughout, and "The Cube" a specialty showcase and training center that includes the newly developed lobby. The property is 100% leased to Fiserv under a triple-net lease that expires in December 2027. Due to the single-tenant exposure, Moody's value incorporated a lit/dark analysis. After an initial three-year interest-only period, the loan has amortized 1.3% since securitization. Moody's LTV and stressed DSCR are 139% and 0.85X, respectively, compared to 140% and 0.84X at the last review.

The second largest loan is the Prudential Plaza Loan ($49.4 million -- 7.2% of the pool), which represents a pari-passu portion of a $410.4 million mortgage loan. The loan is secured two, Class A office towers totaling 2.4 million SF located in Chicago's East Loop submarket. One Prudential Plaza is a 41-story, 1.3 million SF building that was built in 1955 and renovated in 1990/2014-2015. Two Prudential Plaza is a 64-story, 1.0 million SF building completed in 1990. The two towers are connected by a public mezzanine level that contains approximately 60,000 SF of restaurant and retail space. The property was sold to Sterling Bay in 2018 for a reported contract price of $680 million. As of December 2019, the properties were 89% occupied, compared to 87% in 2018 and 76% at securitization. After an initial four-year interest-only period, the loan has amortized 1.1% since securitization. Moody's LTV and stressed DSCR are 136% and 0.74X, respectively, compared to 138% and 0.73X at the last review.

The third largest loan is the U-Haul AREC Portfolio Loan ($43.9 million -- 6.4% of the pool), which represents a pari-passu portion of a $85.5 million mortgage loan. The loan is secured by a 23-property self-storage portfolio containing approximately 11,600 units and totaling 1.2 million SF across 10 states. The largest concentration by SF is located in Nevada (18% of NRA), Florida (17% of NRA), and New Jersey (14% of NRA). The loan sponsor is AMERCO, the holding company for U-Haul International Inc., one of the largest North American operators of self-storage facilities. As of September 2019, the portfolio was 92% occupied, compared to 94% in March 2017 and 91% at securitization. Property performance has improved since securitization due to higher rental revenues. The loan has amortized 9.6% since securitization. Moody's LTV and stressed DSCR are 94% and 1.17X, respectively, compared to 99% and 1.11X at the last review.

REGULATORY DISCLOSURES

For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.

The analysis includes an assessment of collateral characteristics and performance to determine the expected collateral loss or a range of expected collateral losses or cash flows to the rated instruments. As a second step, Moody's estimates expected collateral losses or cash flows using a quantitative tool that takes into account credit enhancement, loss allocation and other structural features, to derive the expected loss for each rated instrument.

Moody's did not use any stress scenario simulations in its analysis.

For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security 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 credit rating action on the support provider and in relation to each particular credit 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 credit rating action, and whose ratings may change as a result of this credit 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.

The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.

These ratings are solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.

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

Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1133569.

At least one ESG consideration was material to the credit rating action(s) announced and described above.

The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.

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.

Amy Wang
Associate Lead Analyst
Structured Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Matthew Halpern
VP - Senior Credit Officer
Structured Finance Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

No Related Data.
© 2020 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/OR ITS CREDIT RATINGS AFFILIATES ARE MOODY'S 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 INVESTORS SERVICE 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 INVESTORS SERVICE 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.

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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 $2,700,000. 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 JPY250,000,000.

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

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