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
Está por salir del sitio local de España y comenzará a navegar en el sitio global. ¿Desea continuar?
No mostrar este mensaje nuevamente
Si
No
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”, 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 information that becomes accessible to you (the “Information”). References herein to “Moody’s” include Moody’s Corporation. and each of its subsidiaries and affiliates..

 

Terms of One-Time Website Use

 

1.             Unless you have entered into an express written contract with www.moodys.com to the contrary and/or agreed to the Terms of Use at www.moodys.com or ratings.moodys.com, 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.             CREDIT RATINGS AND MOODY’S MATERIALS FOUND ON WWW.MOODYS.COM OR SITES OTHER THAN RATINGS.MOODYS.COM MAY NOT BE DISPLAYED IN REAL TIME. FOR REAL-TIME DISPLAYS OF CREDIT RATINGS AND OTHER INFORMATION REQUIRED TO BE DISCLOSED BY MIS PURSUANT TO APPLICABLE LAW OR REGULATION, PLEASE USE RATINGS.MOODYS.COM.           

 

3.             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.

 

4.             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.     

 

5.             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.​​​

 

6.             You agree that any disputes relating to this agreement or your use of the Information, whether 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 assigns B2 first-time issuer rating to the Government of Benin with a positive outlook

 The document has been translated in other languages

18 Jun 2019

New York, June 18, 2019 -- Moody's Investors Service ("Moody's") has today assigned first-time local and foreign currency issuer ratings of B2 to the Government of Benin with a positive outlook. Moody's also affirmed the senior unsecured foreign currency rating at B2.

The ratings were initiated by Moody's Investors Service and were not requested by the rated entity.

The key drivers supporting the B2 rating are as follows:

1. "Low" economic strength due to the economy's small size, reliance on subsistence agriculture that constrains income levels, and the concentration of exports to one market, Nigeria. The government's development agenda supports robust medium-term growth prospects.

2. "Low" institutional strength, informed by low scores in Worldwide Governance Indicators for government effectiveness, rule of law and control of corruption, and poor fiscal management and absence of effective checks and balances that led to a severe deterioration of the government's balance sheet.

3. "Very Low" fiscal strength, with a relatively high government debt burden although Moody's expects the debt burden to decline as a result of the ongoing fiscal consolidation

4. "Moderate (-)" susceptibility to event risk driven by liquidity risk albeit improving following the government's fiscal consolidation and maturity re-profiling efforts.

The positive outlook reflects the prospect of continued fiscal consolidation and stronger GDP growth through effective implementation of the 'Programme d'Action du Gouvernement 2016-21' (PAG) that could lead to a faster decline in the debt burden, borrowing needs and liquidity risks than Moody's currently expects.

Concurrently, Moody's assigned local and foreign currency deposit ceilings as well as local and foreign currency bond ceilings, all at Ba2.

RATINGS RATIONALE

RATIONALE FOR THE B2 RATING

Low economic strength due to economic reliance on subsistence agriculture and concentration of exports to Nigeria

The first driver supporting the decision to assign a B2 rating is the economy's high vulnerability to shocks. Moody's expects Benin's economic strength to remain low, despite growth-enhancing reforms currently being implemented.

Hindering the sovereign's capacity to absorb shocks are Benin's small economy, with GDP estimated at around $10.4 billion in 2018, relatively undiversified and reliant on low-productivity agriculture, commercial activities and exports to one country, Nigeria (B2 stable) which absorbs most of Benin's exports (66% in 2017). Additionally, Benin is also characterized by low income levels, with GDP per capita of $2,426 in PPP terms in 2018, with 70% of the labor force employed in weather-reliant agriculture. This explains why Benin's economic strength and credit quality are susceptible to climate change.

The PAG, the government's development agenda, underpins its efforts to overhaul the economy. Moody's expects that the PAG will significantly bolster growth potential, although in the foreseeable future Benin's structural economic vulnerabilities will remain. The PAG aims to remove important bottlenecks to economic growth and develop the country's infrastructure. Moody's assumes that the plan will be partially implemented given its cost and reliance on the participation of the private sector that remains uncertain. In addition, institutional weaknesses will hamper the plan's effectiveness. Nonetheless, Moody's expects that the plan, if at least partially successful, will sustain robust medium-term growth prospects and, by lessening exposure to shocks to core sectors or export partners, lower volatility of growth.

Among the PAG reforms already implemented are the increased liberalization of the labor market, the creation of a computerized land register, and the outsourcing of the management of Cotonou's port to the Port Authority of Antwerp. All of these help to improve the functioning of the economy. In particular, with the Port of Cotonou, an important asset of the economy, Benin could become a significant commercial hub in West Africa as a gateway to serve the Nigerian market and the landlocked countries to the north, which include Niger and Burkina Faso.

Real GDP growth accelerated to 6.7% in 2018 and Moody's expects it to remain at 6-7% in coming years as the plan is further implemented. This will be supported by increased agricultural production, sustained levels of investment above 25% of GDP, and an acceleration in the services sector.

Low institutional strength reflecting low governance scores and poor fiscal management in the past

Moody's assessment of Benin's institutional strength is informed by its low scores in the Worldwide Governance Indicators. Benin scores in the bottom quartile of Moody's rated sovereigns on government effectiveness, rule of law and control of corruption, institutional features that Moody's takes into account in its assessment of sovereigns' credit quality. Poor fiscal management at the end of the mandate of the previous administration in 2015-16, which led to a severe deterioration of the government's balance sheet, points to underlying institutional weaknesses including the absence of effective checks and balances. However, the current administration's measures aimed at fiscal consolidation and, with the IMF support, strengthening the effectiveness and credibility of fiscal and other policymaking, point to a potential improvement in Benin's institutional strength assessment over time.

The country's membership of the West Africa Economic and Monetary Union (WAEMU) supports macroeconomic stability through a stable exchange rate that favors low and stable inflation (averaging 1.5% since 2010). WAEMU membership also supports institutional improvements as well as the deepening of regional markets. In addition, the level of data transparency and reporting ensured by the WAEMU's central bank, the BCEAO, supports Benin's institutional strength.

Very low fiscal strength with a relatively high debt burden, that is likely to decline with current fiscal consolidation efforts

The third driver underpinning the B2 rating is "Very Low" fiscal strength reflecting the government's relatively high debt burden, with debt estimated at 54.6% of GDP in 2018, up from 30.5% of GDP in 2014. The sharp increase in debt is the result of large expenditures ordered by the previous administration just prior to the presidential election as well as counter-cyclical fiscal policies to support the economy, implemented as soon as newly-elected President Talon took office in April 2016.

However, the reduction in the fiscal deficit to 4.7% in 2018 from 7.6% in 2015, and the commitment to return to fiscal surplus in 2021 support an anticipated reversal in the debt trajectory. While fiscal metrics are likely to move in that direction, Moody's anticipates that the budget may return to surplus one or two years later in 2022 or 2023. This is due to the fact that extra spending pressure will come from security and defense expenditure, as well as the need to fund large capital projects. Moody's expects the debt-to-GDP ratio to be broadly unchanged this year at 54% in 2019 and decline thereafter, moving close to 50% in 2020.

"Moderate (-)" susceptibility to event risk, mainly driven by declining liquidity risk.

The fourth driver underpinning Benin's B2 rating is "Moderate (-)" susceptibility to event risk, driven by liquidity risk. The government's financing needs have been sizeable in recent years, in excess of 10% of GDP in 2017 and 2018. Alongside fiscal consolidation, the government's efforts to re-profile its domestic debt by lengthening its maturity including through issuance of international debt and by increasing the share of semi-concessional debt have resulted in material reductions in annual borrowing requirements. Moody's anticipates gross borrowing requirements will decline to around 8% of GDP in 2019 and further in 2020, reducing government liquidity risks. However, despite recent successful international capital market issuance, Benin's access to financing in times of sudden need is not yet firmly established.

Additionally, Moody's assessment of political risk is "Low (+)". Benin's political environment has been stable since the introduction of the multi-party system in 1991 with six presidential elections, all of them characterized by peaceful transitions of power. However, the recent parliamentary elections during which opposition parties where prevented from participating after the introduction of a new electoral code, mean that opposition parties are likely to use the street to express their opinion. Therefore the risk of political instability has increased to some extent.

The banking system represents "Low (+)" risk to the sovereign: there are no immediate contingent liabilities as a result of the sector's small size. Finally, although Benin runs structural trade deficits, its membership of the WAEMU supports the country's external position, limiting external vulnerability risk.

RATIONALE FOR THE POSITIVE OUTLOOK

The positive outlook reflects upside risks to Benin's credit profile that would result from faster and more sustained fiscal consolidation and higher GDP growth than Moody's currently expect. Real GDP growth has accelerated to an estimated 6.7% in 2018 from 4% in 2016 when the PAG started. The development agenda underpins the government's efforts to overhaul the economy by removing important bottlenecks to economic growth and developing infrastructure. While in its baseline forecast Moody's expects the PAG to contribute to strong growth, more effective implementation of the reforms would sustain growth at higher rates and further increase Benin's economic resilience over the medium term.

Moreover, through these reforms growth may become increasingly less dependent on government spending, creating scope for faster fiscal consolidation, a more rapid decline in the government's debt burden and lower borrowing needs and liquidity risks than currently assumed by the rating agency.

WHAT COULD CHANGE THE RATING UP:

Moody's will consider an upgrade of Benin's rating if i) the ongoing implementation of the "Programme d'Action du Gouvernement" (PAG) were to lead Moody's to conclude that high levels of economic growth will be sustainable without recourse to fiscal stimulus, pointing to a markedly faster decline in the government debt burden; ii) a structural improvement in institutional strength, a long-term constraint on Benin's rating.

WHAT COULD CHANGE THE RATING DOWN:

While a rating downgrade is unlikely at this point given the positive outlook, Moody's would consider stabilizing Benin's rating outlook if failure to sustain the reform effort, or an external shock, were to lead Moody's to conclude that Benin's government debt and, relatedly, the government's annual borrowing requirement, will cause refinancing risks to rise. Moody's will consider a downgrade if fiscal consolidation were to reverse, leading to fiscal metrics more compatible with a lower rating level. For example, as a result of a combination of fiscal slippages, lower commodity prices, crystallization of contingent liability risks and/or significant delays in the implementation of the PAG as well as any reduced support from the donor community and international financial institutions to implement the development agenda.

GDP per capita (PPP basis, US$): 2,426 (also known as Per Capita Income)

Real GDP growth (% change): 6.7% (also known as GDP Growth)

Inflation Rate (CPI, % change Dec/Dec): 1.0%

Gen. Gov. Financial Balance/GDP: -4.7% (also known as Fiscal Balance)

Current Account Balance/GDP: -8.4% (also known as External Balance)

External debt/GDP: 26.3%

Level of economic development: Low level of economic resilience

Default history: No default events (on bonds or loans) have been recorded since 1983.

On 13th of June 2019, a rating committee was held to consider the issuer's Economic Strength, Institutional Strength, Fiscal Strength and Susceptibility to Event Risk, with a view to assigning a first-time public issuer rating to the government of Benin.

The principal methodology used in these ratings was Sovereign Bond Ratings published in November 2018. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

The local market analyst for this rating is Mali Aurelien , +971 (423) 795-37.

The weighting of all rating factors is described in the methodology used in this credit rating action, if applicable.

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 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.

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.

Elisa Parisi-Capone
Vice President - Senior Analyst
Sovereign Risk 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

Marie Diron
MD - Sovereign Risk
Sovereign Risk Group
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077

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.
© 2023 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 credit 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, Inc. 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 — Charter Documents - 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 JPY100,000 to approximately JPY550,000,000.

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