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04 Feb 2011
JPY 10 billion of New Debt Securities Rated
Tokyo, February 04, 2011 -- Moody's Japan K.K. has assigned a Aa2 rating to a
domestic bond issued by City of Sapporo. The rating outlook is
stable.
The bond issuance is:
• JPY 10 billion Series 10 senior unsecured bonds due 2020
RATING RATIONALE
The rating is supported by the city's declining debt burden, fiscal
reform activities, sound debt and investment management policies,
including for its related entities, and a stable local economy.
Sapporo's overall debt has declined over the past six years. Interest
payments have also declined. The recent decline in debt burden
reflects a sharp reduction in capital expenditures that ensures new debt
issuance is below principal payments each year. Moody's does not
believe that capital expenditures will ramp up to the levels experienced
in the early 1990s and therefore, the city's debt burden is expected
to decline modestly over the medium term.
The city is also making significant efforts to improve its fiscal outcomes
by making cuts to overall expenditures. Financial flexibility is
limited, given the city's relatively high dependence on local allocation
tax for revenues and the high proportion of social security costs in its
expenditure base. Still, reform activities undertaken to
date have resulted in improved financial performance.
Debt and investment management policies under which the city and its related
entities operate are conservative and are supported by explicit prudential
guidelines focusing on ensuring financial stability. For instance,
the city has strict investment guidelines that limit exposure to individual
counterparty risks. Moody's views this prudential framework as
a positive factor underpinning the city's creditworthiness.
The city plays an important role as an economic and financial center in
Hokkaido Island. Its population is increasing due to migration
from other cities in Hokkaido, as individuals seek to enter higher
education institutions or pursue employment opportunities.
It incorporates, as well, a low likelihood that, if
the central government were to apply unorthodox fiscal measures (which
Moody's might consider a default) to address fiscal difficulties,
such measures might be extended to local government local currency bonds.
Moody's last rating action with respect to Sapporo City was taken on July
28, 2009, when Moody's re-aligned 13 Japanese RLGs'
ratings to Aa2, the same level as the Japanese sovereign rating.
The principal methodology used in this rating was Moody's "Regional
and Local Governments Outside the US" and "The Application of Joint Default
Analysis to Regional and Local Governments", published respectively
on September 30, 2010, and available on www.moodys.co.jp.
The City of Sapporo is one of 19 designated cities in Japan and has a
population of 1.9 million. Its local GDP is JPY 6.5
trillion, according to the most recent statistics.
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, 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,
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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
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The date on which some Credit Ratings were first released goes back to
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the meaning of each rating category and the definition of default and
recovery.
Tokyo
Yuka Tamba
Vice President - Senior Analyst
Sub-Sovereign Group
Moody's Japan K.K.
JOURNALISTS: (03) 5408-4110
SUBSCRIBERS: (03) 5408-4100
London
David Rubinoff
MD - Sub-Sovereigns
Sub-Sovereign Group
Moody's Investors Service Ltd.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Moody's Japan K.K.
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Japan
JOURNALISTS: (03) 5408-4110
SUBSCRIBERS: (03) 5408-4100
Moody's assigns Aa2 to City of Sapporo's domestic bond
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.
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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.
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