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Rating Action:

Moody's downgrades Japanese bank-affiliated finance companies and continues to place them on review for downgrade following bank downgrades

Global Credit Research - 24 Aug 2011

Tokyo, August 24, 2011 -- Moody's Japan K.K. has taken the following rating actions on Japanese bank-affiliated finance companies.

(1) Downgraded by one notch the long-term issuer and senior unsecured debt ratings of the following and placed the ratings on review for downgrade:

Mitsubishi UFJ Lease and Finance Co., Ltd.

Mitsubishi UFJ NICOS Co., Ltd.

Sumishin Panasonic Financial Service Co., Ltd.

Orient Corporation

(2) Downgraded by one notch the commercial paper rating of:

Sumishin Panasonic Financial Services Co., Ltd.

(3) Placed the commercial paper and short-term issuer ratings of the following on review for downgrade:

Mitsubishi UFJ Lease and Finance Co., Ltd.

Mitsubishi UFJ NICOS Co., Ltd.

This rating action follows Moody's rating action on August 24, 2011, to downgrade the long-term deposit ratings and all the long-term credit ratings of their parent banks or main shareholders.

These parent banks or main shareholders are:

Bank of Tokyo-Mitsubishi, Ltd. (BTMU, Aa3 stable) -- the core bank of the Mitsubishi UFJ Financial Group Inc. (MUFG) -- and main shareholder of Mitsubishi UFJ Lease and Finance Co., Ltd. and parent for Mitsubishi UFJ NICOS Co., Ltd.

Sumitomo Trust and Banking Co., Ltd. (STBC, A1 stable) -- the parent for Sumishin Panasonic Financial Services Co., Ltd.

Mizuho Bank, Ltd. (MHBK, A1 under review for possible downgrade) and Mizuho Corporate Bank, Ltd. (MHCB, A1 under review for possible downgrade) -- two primary operating banks of Mizuho Financial Group, Inc. -- and main shareholder of for Orient Corporation.

A list of the affected ratings can be found at the end of this press release.

RATING RATIONALE

Moody's ratings for these bank-affiliated finance companies incorporate their stand-alone credit financial strength and the probability of extraordinary financial support from their parent banks or main shareholders in case of stress.

Specifically, the downgrades of these bank-affiliated finance companies' ratings have been prompted by the downgrades of their parent banks' ratings, which indicate the weakened capacity of their respective parent banks or main shareholders to support them in a time of stress.

Moody's decision to continue to place these ratings on review for downgrade reflects Moody's ongoing concern that their standalone financial strength may be subject to continued downward pressure, in view of the stagnant state of the domestic operating environment.

The leasing companies face the challenge of a decline in the volume of leasing transactions due to weakening demand. In Moody's view, this trend may continue to pressure their top-line revenues over the medium-term.

And the credit card companies also face the dual challenges of intensive competition and a weak domestic economy, and which would adversely affect top-line revenues. In addition, overpaid-interest claims continue to damage the prospects for a stabilization in their bottom-line profits, although on a much smaller scale when compared to the Japanese consumer finance companies.

In its review process, Moody's will reassess the prospects for the standalone financial strength of these bank-affiliated finance companies as well as the appropriate level of support consideration from their parent banks or main shareholders, and reflect such factors in the final ratings.

Moody's notes that on August 15, 2011. it published a request for comment on "Proposal to Update: Finance Company Global Rating Methodology". It is likely that the review of these ratings will take into account eventual revisions to the finance company methodology.

The principal methodology used in this rating was "Analyzing the Credit Risks of Finance Companies: Rating Methodology" published on September 30, 2010, and available on www.moodys.co.jp.

List of the affected ratings are as follow (includes prospective ratings on shelf registrations/programs where applicable).

The following ratings have been downgraded and placed on further review for downgrade.

Mitsubishi UFJ Lease & Finance Co., Ltd. (Lead analyst: Tetsuya Yamamoto)

LT Issuer Rating (Domestic): to A2 from A1

Senior Unsecured (Foreign): to A2 from A1

Sumishin Panasonic Financial Services Co., Ltd. (Lead analyst: Yasuhiro Matsumoto)

LT Issuer Rating (Domestic): to A3 from A2

Mitsubishi UFJ NICOS Co., Ltd. (Lead analyst: Tetsuya Yamamoto)

LT Issuer Rating (Foreign): to A2 from A1 *

Orient Corporation (Lead analyst: Tetsuya Yamamoto)

LT Issuer Rating (Domestic): to Baa2 from Baa1

The following ratings have been downgraded.

Sumishin Panasonic Financial Services Co., Ltd. (Lead analyst: Yasuhiro Matsumoto)

Commercial Paper (Domestic): to Prime-2 from Prime-1

The following ratings have been placed under review for downgrade.

Mitsubishi UFJ Lease & Finance Co., Ltd. (Lead analyst: Tetsuya Yamamoto)

Commercial Paper (Domestic): Prime-1

Mitsubishi UFJ NICOS Co., Ltd. (Lead analyst: Tetsuya Yamamoto)

Commercial Paper (Domestic): Prime-1 *

ST Issuer Rating (Foreign): Prime-1 *

* By Japan regulations, these ratings were initiated by Moody's Investors Service and were not requested by the issuer. The rating committee was provided, for purposes of the rating, access to the books, record and other relevant internal documents of the rated entity or related third parties.

REGULATORY DISCLOSURES

Information sources used to prepare the credit rating are the following: parties involved in the ratings, parties not involved in the ratings, public information, confidential and proprietary Moody's information.

Measures taken to ensure the quality of this information include use of public information, reviews by a third party and verification by the lead analyst.

Moody's considers the quality of information available on the issuer or obligations satisfactory for the purposes of maintaining a credit rating.

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
Kei Kitayama
Representative Director
Moody's Japan K.K.
JOURNALISTS: (03) 5408-4110
SUBSCRIBERS: (03) 5408-4100

Hong Kong
Stephen Long
MD - Financial Institutions
Financial Institutions Group
Moody's Investors Service Hong Kong Ltd.
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (852) 3551-3077

Moody's Japan K.K.
Atago Green Hills Mori Tower 20fl
2-5-1 Atago, Minato-ku
Tokyo 105-6220
Japan
JOURNALISTS: (03) 5408-4110
SUBSCRIBERS: (03) 5408-4100

Moody's downgrades Japanese bank-affiliated finance companies and continues to place them on review for downgrade following bank downgrades
No Related Data.

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