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” [at the end of this document], 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 inform​ation that becomes accessible to you [after clicking “I AGREE”] (the “Information”).   References herein to “Moody’s” include Moody’s Corporation, Inc. and each of its subsidiaries and affiliates.

 

Terms of One-Time Website Use

 

1.            Unless you have entered into an express written contract with Moody’s to the contrary, 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.            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.          

 

3.            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.

 

4.            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.     

 

5.            You agree that any disputes relating to this agreement or your use of the Information, whether sounding 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 changes outlook on UK's rating to negative from stable, affirms Aa2 rating

08 Nov 2019

Paris, November 08, 2019 -- Moody's Investors Service ("Moody's") has today changed the outlook on the Government of the United Kingdom's Aa2 ratings to negative from stable. Concurrently, Moody's has affirmed the Aa2 long-term issuer and senior unsecured ratings.

The outlook on the Bank of England's Aa2 issuer and senior unsecured bond ratings and the (P)Aa2 on its senior unsecured MTN programme has also changed to negative from stable; the Aa2 and (P)Aa2 ratings have been affirmed. The short-term issuer ratings have been affirmed at Prime-1.

The change in outlook to negative from stable is driven by two factors:

1. UK institutions have weakened as they have struggled to cope with the magnitude of policy challenges that they currently face, including those that relate to fiscal policy.

2. The UK's economic and fiscal strength are likely to be weaker going forward and more susceptible to shocks than previously assumed.

The affirmation of the UK's Aa2 sovereign ratings balances the credit-supportive factors such as wealth, economic diversification, a sound monetary policy framework and a highly flexible labour market against constraints such as a high debt burden and weak productivity growth.

The foreign and local currency bond ceilings and the local-currency deposit ceiling remain unchanged at Aaa. The foreign-currency long-term deposit ceiling remains Aa2, and the short-term foreign-currency bond and bank deposit country ceilings remain at P-1.

RATINGS RATIONALE

RATIONALE FOR NEGATIVE OUTLOOK

FIRST DRIVER: UK INSTITUTIONAL CAPACITY AND COMMITMENT TO FISCAL DISCIPLINE HAVE WEAKENED

The increasing inertia and, at times, paralysis that has characterized the Brexit-era policymaking process has illustrated how the capability and predictability that has traditionally distinguished the UK's institutional framework has diminished. Events in the House of Commons in recent months have revealed legislators, policymakers and administrators to be unable to arrive at the consensus needed to achieve either a broadly acceptable approach to Brexit, or the continuation of policy in other important areas, for example to address challenges relating to education, productivity, or investment in infrastructure.

Brexit has been the catalyst for this erosion in institutional strength, which can also be seen in, among other things, the small but significant weakening of Worldwide Governance Indicators for Government Effectiveness and Rule of Law. It is likely to remain so for some time to come given the inevitably contentious nature of the negotiations regarding a permanent set of trading arrangements with the EU. And it would be optimistic to assume that the previously cohesive, predictable approach to legislation and policymaking in the UK will return once Brexit is no longer a contentious issue, however that is achieved. The decline in institutional strength appears to Moody's to be structural in nature and likely to survive Brexit given the deep divisions within society and the country's political landscape.

This broad erosion in the predictability and cohesion of policymaking is mirrored in areas of policy that are significant from a credit perspective. Most importantly, the UK's broad fiscal framework, characterized by features such as multi-year budget plans and more detailed revenue and spending decisions announced for the outer years of the planning period, has weakened. Following the significant fiscal consolidation that took place between 2010 and 2015, more recent years have seen an increasing willingness to move the goalposts, with changes to the longer-term fiscal anchor and the definition of fiscal targets and a revealed preference to shift the fiscal tightening to outer years of a five-year horizon. Successive governments have announced large, permanent increases in public expenditures, most notably a large increase in spending on the National Health Service (NHS), outside the normal calendar for fiscal policy changes and without detailed policy plans.

Over the longer term, institutional weakening may also impact the UK's economic strength, through its effect on the investment climate and on the UK's attractiveness to skilled and unskilled foreign labour. In recent years, we have already seen the negative impact this can have, and Moody's expects this negative influence will likely endure as the exit process continues and uncertainties persist during the subsequent phase of trade negotiations with the EU and with other nations.

This deterioration in the quality of institutions has made policy planning more opaque and unpredictable. The independent Office for Budget Responsibility (OBR) has noted that policy risks to the public finances are now significant and are greater than they were two years ago. Going forward, no matter what the outcome is of the general election Moody's sees widespread political pressures for higher expenditures with no clear plan to increase revenues to finance this spending. In Moody's view, the commitment to maintaining a predictable, prudent fiscal framework and associated policy settings that has characterized the UK's credit profile until now is weakening in a way that will transcend electoral cycles as pressures from the electorate for improved public services continue to rise.

SECOND DRIVER: A LIKELY DETERIORATION IN FISCAL AND ECONOMIC STRENGTH

The weakening of the fiscal policy environment is evident in the data. Even after years of fiscal consolidation, the country remains highly indebted, with gross general government debt being only marginally below its 2015 peak of 86.9% of GDP, and unlikely to fall significantly over the medium term. In Moody's baseline projections, the UK's general government debt is set to stay broadly unchanged at around 85% of GDP over the next 3-4 years, absent any unexpected economic shocks. While that is a lower level than assumed when Moody's downgraded the UK's rating to Aa2 in September 2017, the trajectory has changed. Then, Moody's expected a gradual decline in the debt burden over the longer term. Now, Moody's sees little appetite or opportunity for that to happen.

Indeed, the risks are that debt will begin to rise. In the current political climate, Moody's sees no meaningful pressure for debt-reducing fiscal policies. In fact, there is rising pressure for spending increases with little apparent clarity as yet on how they might be financed through additional revenues and little scope for politically acceptable expenditure cuts. While greater public investment could be growth-enhancing, there is no appetite to address important areas of rigidity in public expenditure, particularly health and social care, which will be key sources of future financial pressure. In June 2018, the government pledged real annual increases on average of 3.4% for the NHS for the next five years. Even that expenditure increase may not be sufficient to achieve the longer-term objective of improving standards. In recent years, the government has consistently had to accommodate higher spending by the NHS, and the OBR projects that health spending will nearly double as a proportion of GDP over the coming decades.

The large and sticky debt burden is a key source of fragility for the UK's credit profile, particularly at the current juncture, when external threats to growth are rising and internal growth momentum is slowing.

The magnitude of the fiscal challenge may well be amplified by weaker-than-expected growth. Since the EU referendum, UK business investment (which accounts for more than half of gross fixed capital formation) has contracted by more than 1% in real terms, in contrast to the growth that Moody's has observed in other advanced economies. This shortfall does not just affect current growth rates. The persistent weakness of business investment, combined with firms' bias towards hiring as a more flexible way to increase capacity, has resulted in limited capital deepening—a trend that will further intensify the UK's existing productivity challenges over the longer term. The UK economy has already experienced low productivity growth since the global financial crisis, compared to previous cycles and also other advanced economies.

This weakness in investment has taken place despite broadly favourable credit conditions and limited spare capacity. It is unlikely to reverse quickly; Brexit-related uncertainty as to future policy settings and the UK's relationship with trading partners is unlikely to diminish much even in the event that a deal is struck, given the significant challenges it is now clear will be inherent in agreeing any sort of longer-term trade agreement with the EU. Even if the UK leaves the EU under the terms of a revised Withdrawal Agreement, the two sides will still have to go through difficult and lengthy negotiations around the terms of their future relationship. Negotiations with other key trading partners are unlikely to be any more straightforward.

These trends leave the UK more vulnerable to shocks, and the debt burden is sensitive to both growth and fiscal shocks. A deterioration in growth and the fiscal performance as well as a rise in interest rates or inflation would cause the debt burden to rise not fall. In Moody's view, adverse fiscal outcomes would have the most impact, followed by a reduction in growth.

RATIONALE FOR AFFIRMATION OF Aa2 RATINGS

The factors supporting the affirmation of the UK's Aa2 sovereign rating include economy's significant strength, which is a function of its large size, diversification, and flexibility. The government also enjoys very low financing risks and a very high average debt maturity. While the UK's institutions have weakened, in part due to the serious challenges raised by Brexit, they remain strong in comparison to global peers and the monetary policy framework and central banking arrangements continue to be excellent.

ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS

Moody's takes account of the impact of environmental (E), social (S), and governance (G) factors when assessing sovereign issuers' economic, institutional and fiscal strength and their susceptibility to event risk. In the case of the UK, the materiality of ESG to the credit profile is as follows.

Environmental considerations are not currently material to the rating.

Social factors are taken into account in determining the UK's credit profile. The most relevant social factors relate to spending pressures on healthcare and pensions due to an ageing population. Over the longer term, demographic pressures will (as in many peers) negatively influence potential growth in the absence of increases in productivity, in participation rates or in immigration.

Governance factors are a material driver of the rating. On a global basis, the UK's governance institutions are strong, supporting the Aa2 rating for now. However, the deterioration observed in recent years is a key driver for the negative outlook.

WHAT COULD CHANGE THE RATING UP/DOWN

The UK's rating would likely be downgraded if we were to conclude that policymakers' capacity and appetite to develop a credible medium-term debt-reduction strategy was low. This would be particularly negative for the UK's credit quality if, in our view, that reflected a continued overall erosion in the coherence and predictability of UK policymaking. Structurally weaker economic fundamentals would also undermine the UK's credit profile. In that context, departure from the EU without a deal would be strongly negative for the rating. However, even if some form of withdrawal agreement were to be signed, indications that the UK would not be able to replace the very favourable trading arrangements embedded in EU membership with similarly advantageous agreements with key trading partners in Europe and elsewhere would also be negative for the rating.

Given the negative outlook on the UK's rating, an upgrade is unlikely in the short to medium term. However, indications that the apparent erosion in institutional strength is in fact reversible and that the coming years will see a reversion to the capability and predictability that has traditionally characterized the UK's institutional framework would support the rating at its current level. Such an outcome would most likely be characterised by the development of a credible strategy to achieve medium-term fiscal objectives that put the debt burden on a downward trajectory. Passage of economic policies that could sustainably boost growth potential would also be credit positive.

GDP per capita (PPP basis, US$): 45,741 (2018 Actual) (also known as Per Capita Income)

Real GDP growth (% change): 1.4% (2018 Actual) (also known as GDP Growth)

Inflation Rate (CPI, % change Dec/Dec): 2% (2018 Actual)

Gen. Gov. Financial Balance/GDP: -2.3% (2018 Actual) (also known as Fiscal Balance)

Current Account Balance/GDP: -4.3% (2018 Actual) (also known as External Balance)

External debt/GDP: [not available]

Level of economic development: Very High level of economic resilience

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

On 05 November 2019, a rating committee was called to discuss the rating of the United Kingdom, Government of. The main points raised during the discussion were: The issuer's economic fundamentals, including its economic strength, have materially decreased. The issuer's institutional strength/framework, have materially decreased. The issuer's fiscal or financial strength, including its debt profile, has materially decreased. The issuer's susceptibility to event risks has not materially changed.

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 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, 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.

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.

Sarah Carlson, CFA
Senior Vice President
Sovereign Risk Group
Moody's France SAS
96 Boulevard Haussmann
Paris 75008
France
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454

Yves Lemay
MD - Sovereign Risk
Sovereign Risk Group
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454

Releasing Office:
Moody's France SAS
96 Boulevard Haussmann
Paris 75008
France
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454

No Related Data.
© 2020 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 INVESTORS SERVICE, INC. AND/OR ITS CREDIT RATINGS AFFILIATES ARE MOODY'S 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 INVESTORS SERVICE 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 MOODY'S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY'S INVESTORS SERVICE 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 $2,700,000. 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 JPY125,000 to approximately JPY250,000,000.

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

​​​​​​​​
Moodys.com