JPY 50 billion of debt affected
Tokyo, February 18, 2011 -- Moody's Japan K.K. has assigned its Aa2 ratings to Central
Japan Railway Company's (JR Central) bonds. The rating outlook
is stable.
The bond issuances are:
JPY 20 billion Series 54, Senior Unsecured Bond due 2014.
JPY 30 billion Series 55, Senior Unsecured Bond due 2015.
RATING RATIONALE
The rating reflects JR Central's solid cash flow generation mainly from
its Shinkansen super express train operation, the company's importance
in Japan's transportation policy, the favorable regulatory environment
for the railroad operation, and JR Central's substantial debt payment
requirements.
JR Central's core business is the Tokaido Shinkansen services, which
account for about 65% of its total consolidated sales. The
Tokaido Shinkansen is the core of Japan's passenger transportation system,
connecting the country's three largest economic zones. Backed by
their competitive position and solid traffic demand, as well as
the company's efforts to heighten service quality, these services
exhibit favorable performance.
Moody's believes that the operation of the Tokaido Shinkansen is highly
stable, and that its competitiveness against other forms of transportation
is continuing to improve due to the company's ongoing efforts.
JR Central has increased its total number of Nozomi Shinkansen trains,
as well as the number of Nozomi trains directly connected to the Sanyo
area. This should further secure JR Central's ability to enhance
the stability of its cash flow generation.
Approximately 46% of JR Central's total debt comprises its deferred
payment obligations to Japan Railway Construction, Transport and
Technology Agency (JRTT, rated Aa2 by Moody's), an Independent
Administrative Corporation.
The debt is amortized over the long term with moderate annual payments.
With its strong free cash flow, the company has promoted early repayment
of the JRTT debt and has reduced it significantly, from JPY 3.48
trillion at end-March 2002 to JPY 1.48 trillion at end-March
2010. Moody's believes that such early repayment reduces future
interest burdens and contributes to further profitability improvement.
The last rating action with respect to JR Central was on April 10,
2008, when its outlook was changed to stable.
The principal methodology used in this rating was Moody's Global Passenger
Railway Companies Rating Methodology published on September 30,
2010, and available on www.moodys.co.jp.
Central Japan Railway Company, headquartered in Nagoya, is
a railroad operator, with its main franchise comprising the Tokaido
Shinkansen, and conventional lines in the Tokai area.
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 information.
Measures taken to ensure the quality of this information include use of
public information, reviews by a third party and verification by
the lead analyst.
Moody's considers the quality of information available on the issuer or
obligations satisfactory for the purposes of assigning a credit rating.
Moody's adopts all necessary measures to ensure 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 parties. However, Moody's is not an auditor
and cannot in every instance independently verify or validate information
received in the rating process.
Credit ratings are 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. Credit
ratings do not address any other risk, including but not limited
to: liquidity risk, market value risk, or price volatility.
Credit ratings do not constitute investment or financial advice,
and credit ratings are not recommendations to purchase, sell,
or hold particular securities. No warranty, express or implied,
as to the accuracy, timeliness, completeness, merchantability
or fitness for any particular purpose of any such rating or other opinion
or information is given or made by Moody's in any form or manner whatsoever.
The credit risk of an issuer or its obligations is assessed based on information
received from the issuer or from public sources. Moody's may change
the rating when it deems necessary. Moody's may also withdraw the
rating due to insufficient information, or for other reasons.
Moody's Japan K.K. is a credit rating agency registered
with the Japan Financial Services Agency and its registration number is
FSA Commissioner (Ratings) No. 2. The Financial Services
Agency has not imposed any supervisory measures on Moody's Japan K.K.
in the past year.
Please see ratings tab on the issuer/entity page on the Moody's website
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 Credit Ratings were fully digitized and accurate
data may not be available. Consequently, Moody's 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 the Moody's website for further information.
Please see the Credit Policy page on the Moody's website for the methodologies
used in determining ratings, further information on the meaning
of each rating category and the definition of default and recovery.
Tokyo
Kazusada Hirose
VP - Senior Credit Officer
Corporate Finance Group
Moody's Japan K.K.
JOURNALISTS: (03) 5408-4110
SUBSCRIBERS: (03) 5408-4100
Tokyo
Shinsuke Tanimoto
Senior Vice President - Team Leader
Corporate Finance Group
Moody's Japan K.K.
JOURNALISTS: (03) 5408-4110
SUBSCRIBERS: (03) 5408-4100
Moody's Japan K.K.
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Moody's assigns Aa2 ratings to Central Japan Railway Company's bonds