Moodys.com
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
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 first-time A2 Issuer Rating to CleanPowerSF; stable outlook

09 Dec 2020

New York, December 09, 2020 -- Moody's Investors Service, ("Moody's") has assigned a first-time A2 Issuer Rating to CleanPowerSF. The rating outlook is stable.

CleanPowerSF is a not-for-profit, single jurisdiction community choice aggregator (CCA) and a component unit of the City and County of San Francisco's Public Utilities Commission (SFPUC) , which has an extensive history of operations.

RATINGS RATIONALE

The A2 Issuer Rating for CleanPowerSF is underpinned by the strength of its service area, the CCA's ownership by the San Francisco (City & County of) CA (Aaa negative), the SFPUC's (rated Aa2 on its water and sewer system bonds) long-standing experience operating large utility enterprises with energy procurement, a common pool of experienced employees, as well as access to the unrestricted portion of the city's general fund liquidity pool in the case of an emergency.

CleanPowerSF is a single jurisdiction CCA, rather than a joint power agency (JPA) CCA. In many respects, a city-operated CCA is similar to CCAs operated by JPAs in expanding clean energy choices. Strengths of city-operated CCAs include: governance and ownership by the city, linkage to the city's oversight, with city councils having authority over the unregulated rate-setting process, and experience managing other services such as water and sewer. Challenges faced by a single jurisdiction CCA include potential political pressure should rates need to be increased; and not unlike JPA CCAs, a largely untested business model. I

Another differentiating factor between a city-operated CCA such as CleanPowerSF and a JPA CCA is that in the event a city-operated CCA were to terminate its program, cost recovery of any power-related obligation or other costs would remain the responsibility of the city payable from CCA rate revenues. While not court-tested, we think the City obligation is similar to the well-established security afforded to other city-operated enterprises for their obligations. However, CCA obligations are not general obligations of the city. Whether the City of San Francisco would provide implicit support from the general government financial liquidity and or other sources and not just from CleanPowerSF in the event of a program termination is uncertain. That said, CleanPowerSF's legal relationship with the City of San Francisco is identical to the City's other enterprises, and we view the business activities at CleanPowerSF as being strategically important to the City from a policy and environmental perspective. In contrast, the JPA CCA business model is explicit about how such obligations will be handled. Specifically, in JPA agreements, there is explicit authority that a city that terminates their relationship with the JPA CCA must pay off any obligation taken out on their behalf. However, this also remains untested, and a city would only be obliged in the event it chooses to terminate such an agreement.

Despite the very strong socio-economic conditions of CleanPowerSF's service area, a core underpinning of the CleanPowerSF's credit profile, the service territory does include a large commercial customer segment making CleanPowerSF disproportionally negatively impacted by the Shelter in Place (SIP) measures associated with COVID 19. From March - September 2020, total load demand was 8.7% below expectations as per CleanPowerSF's pre-COVID forecast. The biggest impact to lower total demand has come from the commercial load decline which dropped 19.2% compared to CleanPowerSF's pre-COVID forecast. Positively, residential load has been 9.8% above the baseline forecast helping to mitigate the overall net demand decline due to coronavirus.

CleanPowerSF anticipates that demand recovery of up to 95% of pre-COVID levels will be reached in FY 2022, as it has conservatively assumed a slow recovery along with the possibility of an additional wave of cases occurring before a vaccine is broadly implemented. CleanPowerSF expects to maintain adequate levels of liquidity strengthening from the current level of 150 days cash of hand (DCOH) to over 200 DCOH in 2025, averaging 275 DCOH from 2025-2029, while meeting its internal target of three months' operating expenses and 15% of trailing twelve months revenue. The base case also includes CleanPowerSF funding around $72 million of capital investments from internal sources during this timeframe. Under a Moody's Base Case where revenues grow at a slightly lower rate relative to management's projections, DCOH settles at an average of 237 days from 2025-2029.

Over the next few years, CleanPowerSF will have less flexibility to generate excess cash to add to reserves, owing to the above mentioned load demand decline and anticipated slower economic recovery, along with large Power Cost Indifference Adjustment (PCIA) fee increases expected in 2021 that will need to be absorbed by CleanPowerSF and its customers. Total energy supply costs will increase due to anticipated increases in other supply costs (CAISO grid charges, Resource Adequacy capacity costs, short-term renewable energy and greenhouse gas free attribute costs, scheduling coordinator fees, and budget contingency 5%) which are offset in part by lower costs from long-term power purchase agreements (PPAs). Overall, it is anticipated that CleanPowerSF's supply costs will moderately increase every year through 2030, averaging a yearly increase of 2.7% from 2021-2030. In a Moody's sensitized case where revenues grow at a slightly lower rate after FY 2023, net revenues would average $17.9 million per year from FY 2024-FY 2030, compared to an average of $25.7 million per year in management's case. This difference would amount to a difference of $45 million less net revenues under Moody's Case over the 2024-2030 period.

To help mitigate against weaker financial performance in any given year, CleanPowerSF can draw from reserves to stabilize rates and maintain rate competitiveness. Additionally, CleanPowerSF has the authority to independently establish rates and charges, which they review rates regularly, making adjustments to maintain competitiveness and recover costs as needed. While CleanPowerSF's objective is to provide its customers with stable, cost-based and competitive rates, it does not have a policy to always have rates that are below those of Pacific Gas and Electric (PG&E), as some other CCAs do. We view this strategy to be credit positive. We recognize that maintaining rates above PG&E could pose the biggest risk for commercial customers, who tend to be more price sensitive compared to residential customers. As a CCA with a large commercial concentration, we note that it will be key for CleanPowerSF to maintain rate competitiveness within this customer class. We note that CleanPowerSF rates became temporarily more expensive than PG&E's in early 2016, and the CCA reports that no material impact on opt-out rates, a credit positive.

Another key strength for CleanPowerSF's credit quality and liquidity profile is its access to the City of San Francisco's Treasury pool, which provides additional liquidity to CleanPowerSF. As of Q1 2020, the City's pool was made up of approximately $11.2 billion in unrestricted cash, of which $1.2 billion is reserved for the benefit of SFPUC enterprise funds (including $98.3 million for CleanPowerSF). While use of this cash accrues interest, a negative cash balance is not considered to be a debt obligation that would be ranked senior, parity, or subordinate to any external debt of an enterprise. Access to this unrestricted cash from the City is not counted towards Moody's calculated adjusted DCOH, however, it is viewed to be a credit positive qualitative factor that strengthens CleanPowerSF's credit quality and liquidity profile. While not including these resources in our liquidity analysis, CleanPowerSF's Issuer Rating benefits from its ability to access this liquidity, if needed, particularly for an enterprise operating in the power procurement business selling intermittent resources where access to substantial liquidity is a key mitigant to the volatility that can accompany this business model. This liquidity is a key strength compared to JPA-structured CCA peers, which do not have access to a city's cash pool.

The A2 Issuer Rating acknowledges CleanPowerSF's business risk which can lead to cash flow volatility from power procurement particularly given the intermittent nature of the resource. CleanPower's manages this risk through a layered hedging strategy centered around maintaining a net open position. Additional comfort is gained by management's experience operating a utility system, that includes power procurement activities for more than 80 years and by the size of the liquidity resources available to CleanPowerSF which help to backstop their relative position if needed. The Issuer Rating incorporates a view that the challenges facing CCAs, including CleanPowerSF, regarding the PCIA charge which we maintain remains a medium term issue that should ultimately be addressed in subsequent regulatory hearings at the California Public Utilities Commission (CPUC) or through future legislative action, and will in the future decline, as higher-priced legacy contracts at PG&E expire.

As discussed, CleanPowerSF has a high share of commercial and industrial load and revenues, at around 58% of the total, a credit negative. One weakness of the material concentration in commercial and industrial customers is that it leaves CleanPowerSF more exposed to potential Direct Access (DA) risk. CleanPowerSF has assumed a 2-3% load departure from DA in its 10-year forecast. The potential for the cap to be raised in the state remains subject to legislative and regulatory changes that could occur in the medium term, which presents an incremental risk to CCAs in general, and in particular to CleanPowerSF, given the characteristics of its service territory.

The legislation enabling CCAs in CA has an opt-out provision, meaning that all customers within CleanPowerSF's service territory automatically become customers of the CCA unless they choose to opt-out and return to the investor-owned utility provider, in this case, PG&E. Opt-out rates have remained low for rated California CCAs, and CleanPowerSF has experienced an opt-out rate of 3.9% as of September 2020. CleanPowerSF's limited service territory within the city of San Francisco also helps with the management of power procurement.

The A2 issuer rating further considers CleanPowerSF's limited operating history, and the lack of tested regulations for California CCAs. While CleanPowerSF began in 2016, FY 2020 represents CleanPowerSF's first year of full operations with service now reaching all of its intended customers. That said, this risk is offset by the experience within the city operating utility enterprises. We beieve CleanPowerSF's credit profile could strengthen with an operating track record that meets financial and operational performance expectations over the next few years, including the strengthening of liquidity. Further, notwithstanding the current economic challenges arising from the coronavirus, we recognize that the CA CCA model is relatively young, has not gone through different economic cycles, and is still susceptible to changes in the California energy market with respect to resource adequacy requirements, PCIA and DA.

RATING OUTLOOK

The stable outlook reflects expectations that CleanPowerSF will maintain an adequate liquidity profile through FY 2021 despite load demand decline given some flexibility built-into its supply contract positions, while temporarily compressing its discount to PG&E rates. Further, the stable outlook incorporates our expectation the CleanPowerSF's economic service territory will remain strong and supportive of a clean energy value proposition offered by CleanPowerSF through the CCA model for customers in San Francisco.

FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATING

-Significant strengthening of liquidity position on a standalone basis, through continued trend of sound financial operations

-Demonstrated resiliency and flexibility in response to market changes or economic weakness

-Narrowing or de-risking of power related remarketing risk

-Broader statutory acceptance of the CCA business model

-Success in establishing longer term commercial contracts under developing customer retention program

-More certain and favorable future treatment concerning the PCIA allocation that results in less pricing volatility or adequate cost allocation

FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATING

-Significant and permanent load loss, impacting CleanPowerSF's ability to remain competitive and negatively impacting ability to maintain or increase the current liquidity level going forward

-Reluctance or lack of willingness to raise rates such that liquidity profile weakens below 150 DCOH

-Erosion of cost competitiveness relative to PG&E's generation rates

-Changes to state policies that weaken CCA's competitive position

-Inability to manage power procurement market risk such that cost volatility, financial losses or customer under-collections and an increase in opt-out rates occur

-Lower economic recovery in the region due to additional shelter in place restrictions associated with the coronavirus crisis leading to further load decline and permanent loss of economic activity

LEGAL SECURITY

Not applicable

USE OF PROCEEDS

Not applicable

PROFILE

Headquartered in San Francisco, CA, CleanPowerSF is a not-for-profit, single jurisdiction community choice aggregator that began serving customers in May 2016 with the intention of providing all customers with renewable energy sources at competitive rates. CleanPowerSF is a component unit of the City and County of San Francisco's Public Utilities Commission (SFPUC), which partners with PG&E to generate and transmit energy to all San Francisco customers. CleanPowerSF offers two services; customers are automatically enrolled in the Green service which sources from at least 50% renewable energy, or they can upgrade to the SuperGreen service which is 100% renewable energy. As of June 2020, CleanPowerSF reported more than 378,000 retail customers comprised predominantly of residential and commercial customers. CleanPowerSF has the rights and powers to set rates for the electricity it furnishes, incur indebtedness, and issue bonds or other obligations.

CleanPowerSF is an enterprise of the SFPUC, a well-established and large utility in San Francisco and is actively involved in policy and legislation impacting CCAs.

METHODOLOGY

The principal methodology used in this rating was US Municipal Joint Action Agencies Methodology published in August 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1207102. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

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.

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.

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.

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.

Jennifer Chang
Lead Analyst
Project Finance
Moody's Investors Service, Inc.
7 World Trade Center
250 Greenwich Street
New York 10007
US
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Angelo Sabatelle
Additional Contact
Project Finance
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.
© 2022 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 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 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 JPY100,000 to approximately JPY550,000,000.

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

Moodys.com