JPY30 billion in loans and beneficial interest affected
Tokyo, March 09, 2011 -- Moody's Japan K.K. has assigned definitive ratings to DBJ-Muni2011
backed by the ABL.
The ratings address the expected loss posed to investors by the final
maturity date. The structure allows for timely payments of dividends
(in scheduled amounts, on scheduled payment dates), timely
payments of interest, and ultimate payment of principal by the final
maturity date.
The rating on the Class II Beneficial Interest only addresses the timely
payments of dividends (in scheduled amounts, on scheduled payment
dates) and ultimate payment of principal by the final maturity date.
Although payments of the residual dividends to the Class II Beneficial
Interest could be made, the rating on the Class II Beneficial Interest
does not address payments of such dividends.
The complete rating actions are as follows:
Deal Name: DBJ-Muni2011
Class, Amount, Scheduled Dividend Rate/Interest Rate,
Rating
Investor Loan I-1, JPY 7,000,000,000,
Fixed, Aa2 (sf)
Investor Loan I-2, JPY 6,200,000,000,
Fixed, Aa2 (sf)
Class II Beneficial Interest, JPY 16,800,000,000,
Fixed, Aa2 (sf)
Payment Frequency: Semi-annual
Entrustment Date: March 4, 2011
Transfer Date of Beneficial Interests: March 9, 2011
Loan Funding Date: March 9, 2011
Final Maturity Date: May 20, 2039
Underlying Asset: Asset backed loan (ABL, rated Aa2 (sf)),
backed by loans to Japanese regional and local governments (RLGs) (Trust
agreement number: 70-030135-002, Loan A2)
Originator/Seller/Arranger: Development Bank of Japan Inc.
Asset Trust Trustee/Tokkin Trust Trustee: Shinkin Trust Bank,
Ltd.
RATING RATIONALE
The ratings are based mainly on the credit quality of the underlying asset
and the strength of transaction structure.
This transaction is made up of repackaged loans and beneficial interests
backed by the ABL.
The Seller entrusted the ABL (principal amount of JPY30 billion) to the
Asset Trust Trustee, which issued the Class I-1 Beneficial
Interest, the Class I-2 Beneficial Interest, and the
Class II Beneficial Interest. Entrustment of the ABL was perfected
against relevant obligors and third parties by obtaining the ABL borrowers'
approval without objection in writing with a certified date pursuant to
the rules under Article 467 of the Japan's Civil Law.
The Tokkin Trust Entruster entrusted the cash to the Tokkin Trust Trustee
and received the Tokkin Trust Beneficial Interests.
The Seller holds the Class II Beneficial Interest and transferred the
Class I-1 and I-2 Beneficial Interests to the Tokkin Trust
Trustee. The Tokkin Trust Trustee used the proceeds from the Investor
Loan I-1 and I-2, with the limited recourse assets
of the respective Class I-1 and I-2 Beneficial Interests,
to purchase the Class I-1 and I-2 Beneficial Interests.
The transfer was perfected against relevant obligors and third parties
under Article 94 of Japan's Trust Law.
The proceeds from the dividends and the redemption of the principal of
the Class I-1 and I-2 Beneficial Interests will be used
for the payment of interest and principal of the Investor Loans I-1
and I-2 on a pass-through basis, respectively.
The Class I-1 Beneficial Interest, the Class I-2 Beneficial
Interest, and the Class II Beneficial Interest incorporate a sequential
and pass-through payment structure. If acceleration occurs
-- in the event that any of the interest or the principal payments
on the loans to Japanese RLGs backing the ABL are not made on their due
dates -- the Class I-1, I-2, and II Beneficial
Interests will be subject to a pro-rata, pass-through
payment structure instead.
The Borrower's payments on the ABL will be made directly to the
trustee account. The credit quality and the incorporated rating
trigger of the relevant bank accounts are reflected in the expected loss
analysis of the ratings.
Moody's assumes that, given the structure of the transaction
as well as other factors, the risk of interruption to the cash flow
from the asset in the event of bankruptcy of the seller, the entruster,
or the trustee is sufficiently minimized to achieve the rating assigned.
Thus, in Moody's view, the ratings on Investor Loans
I-1 and I-2 and the Class II Beneficial Interest are at
a level equivalent to that of the ABL.
The principal methodology used in this rating was "Moody's Approach
to Rating Repackaged Securities" published on September 30,
2010, and available on www.moodys.co.jp.
Moody's did not receive or take into account any third-party
due diligence reports on the underlying assets or financial instruments
in this transaction.
The ABL, as underlying asset, is backed by the loans to Japanese
RLGs. If the credit quality on the loans to Japanese RLGs changes,
the rating on the ABL could be affected.
If the rating on the ABL (Aa2 (sf)) were changed to Aa3 or A1, the
ratings of the Investor Loan I-1, Investor Loan I-2,
and the Class II Beneficial Interest would also change to Aa3 or A1,
respectively.
REGULATORY DISCLOSURES
For an explanation of the (sf) indicator, please see "Moody's
Structured Finance Rating Scale" on www.moodys.com.
The principal information used to prepare the credit rating comprised
contracts.
Information sources used to prepare the credit rating are the following
parties involved in the rating (the Arranger, etc.);
public information; and confidential and proprietary Moody's
information.
Measures taken to ensure the quality of this information include representations
and warranties.
Moody's considers the quality of information available on the issuer
or obligation satisfactory for the purposes of assigning a credit rating.
Moody's encouraged rating-related entities to disclose any
information that may be pertinent to this transaction, including
items described in "Information Considered Important in Evaluating
the Appropriateness of a Credit Rating" on www.moodys.co.jp,
or to take other measures to enable third parties to verify the appropriateness
of the credit rating.
Rating-related entities have responded to us as below;
Rating-related entities have responded to us that they would not
disclose information pertinent to this transaction to third parties except
through Moody's press release. However, they would
disclose related information pertinent to this transaction to candidate
investors who may invest in the transaction.
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.
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
Daisuke Kitazawa
Asst Vice President - Analyst
Structured Finance Group
Moody's Japan K.K.
JOURNALISTS: (03) 5408-4110
SUBSCRIBERS: (03) 5408-4100
Tokyo
Yusuke Seki
Senior Vice President - Team Leader
Structured 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 definitive rating to DBJ-Muni2011 backed by ABL
