Tokyo, November 22, 2019 -- Moody's Japan K.K. has today confirmed Mitsubishi
UFJ Lease & Finance Co., Ltd.'s (MUL) A3
issuer and senior unsecured debt ratings. At the same time,
Moody's also confirmed MUL Asset Finance Corporation's (MAF)
(P)A3 backed senior unsecured MTN rating. The ratings outlook is
stable.
These actions conclude the review for downgrade initiated on August 29,
2019 for MUL, and August 30, 2019 for MAF.
The affected ratings are:
Mitsubishi UFJ Lease & Finance Co., Ltd.
- Issuer rating (domestic currency): confirmed at A3
- Senior unsecured MTN (foreign currency): confirmed at (P)A3
- Senior unsecured (foreign currency): confirmed at A3
- Outlook is stable
MUL Asset Finance Corporation
- Backed senior unsecured MTN: confirmed at (P)A3
- Outlook is stable
RATINGS RATIONALE
The confirmation of MUL's and MAF's ratings follows the confirmation
of MUFG Bank's a3 Baseline Credit Assessment (BCA) and Adjusted
BCA, as well as the affirmation of its A1 deposit ratings on November
21, 2019. MUFG Bank is MUFG's main operating subsidiary.
We refer to MUFG Bank's BCA to assess MUFG's ability to support
MUL and MAF.
MUL's rating takes into account the company's baa3 stand-alone
credit profile, which reflects its stand-alone strength,
as well as a three-notch uplift owing to our expectation of a very
high probability of support from Mitsubishi UFJ Financial Group,
Inc. (MUFG, A1 stable), in times of stress, given
MUL's strategic importance to the group.
The key factors behind MUL's stand-alone credit profile are the
company's (1) stable profitability backed by its large and diversified
operations; (2) strong asset quality; (3) strong affiliation
with MUFG and the use of its brand; (4) measured approach to business
expansion outside Japan; and (5) weak liquidity, owing to a
high reliance on wholesale funding, largely mitigated by its strong
relationship with Japanese financial institutions.
FACTORS THAT COULD LEAD TO AN UPGRADE
Factors that could lead to an upgrade include: (1) MUL's rating
could be upgraded if MUFG Bank's BCA is upgraded, and (2)
MUL's standalone assessment may be raised if its capitalization and return
on managed assets improve, without an increase in its business risk
profile.
FACTORS THAT COULD LEAD TO A DOWNGRADE
Factors that could result in a downgrade include, but are not limited
to: (1) Any weakening in the degree of operational integration between
MUFG, or a significant decline in MUFG's ownership of MUL,
(2) A downgrade of MUFG Bank's a3 BCA, and (3) MUL's standalone
assessment could be lowered if there is a material increase in higher-risk
assets or increased credit costs or there is a large-scale acquisition
that weakens MUL's capital base and indicates a change in its risk appetite.
The principal methodology used in these ratings was Finance Companies
(Japanese) published in December 2018. Please see the Rating Methodologies
page on www.moodys.com for a copy of this methodology.
Mitsubishi UFJ Lease & Finance Co., Ltd.,
headquartered in Tokyo, is one of the largest leasing companies
in Japan, with total assets of JPY5.8 trillion as of the
end of September 2019.
MUL Asset Finance Corporation is its U.S. domiciled 100%
subsidiary.
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.
Shunsaku Sato
VP - Senior Credit Officer
Financial Institutions Group
Moody's Japan K.K.
Atago Green Hills Mori Tower 20fl
2-5-1 Atago, Minato-ku
Tokyo 105-6220
Japan
JOURNALISTS: 81 3 5408 4110
Client Service: 81 3 5408 4100
Graeme Knowd
MD - Banking
Financial Institutions Group
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077
Releasing Office:
Moody's Japan K.K.
Atago Green Hills Mori Tower 20fl
2-5-1 Atago, Minato-ku
Tokyo 105-6220
Japan
JOURNALISTS: 81 3 5408 4110
Client Service: 81 3 5408 4100