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 downgrades Turkey's sovereign ratings to Ba2 from Ba1; outlook changed to stable from negative

07 Mar 2018

New York, March 07, 2018-- Moody's Investors Service (MIS) has today downgraded the Government of Turkey's long-term issuer and senior unsecured debt ratings to Ba2 from Ba1 and its senior unsecured shelf rating to (P)Ba2 from (P)Ba1. The rating outlook has been changed to stable from negative. Moody's also downgraded the long-term senior unsecured debt rating of Hazine Mustesarligi Varlik Kiralama A.S. to Ba2 from Ba1, a special purpose vehicle wholly owned by the Republic of Turkey from which the Treasury issues sukuk lease certificates, and changed its rating outlook to stable from negative.

RATINGS RATIONALE

The downgrade of Turkey's government rating to Ba2 from Ba1 is driven by two key developments that Moody's identified as triggers for a downgrade when it assigned a negative outlook on the rating last year:

1) The continued loss of institutional strength, as evidenced by further erosion in the effectiveness of monetary policy and further delays in implementing core structural economic reforms.

2) The increased risk of an external shock crystallizing given the country's wide current account deficits, higher external debt and associated large rollover requirements in the context of heightened political risks and rising global interest rates.

The rationale for assigning a stable outlook to the rating is that a Ba2 rating appropriately captures the further erosion of Turkey's institutional strength and its increased susceptibility to event risks, balanced against the country's economic and fiscal strengths, mainly its large and dynamic economy and favorable government debt metrics.

In a related decision, Moody's lowered Turkey's long-term country ceilings: the foreign currency bond ceiling to Baa3 from Baa2; its foreign currency bank deposit ceiling to Ba3 from Ba2 and its local currency country ceilings for bonds and bank deposits to Baa2 from Baa1. The short-term country ceilings remain unchanged at Prime-3 (P-3) for foreign currency bonds and Not Prime (NP) for foreign currency bank deposits.

FIRST DRIVER: CONTINUING EROSION OF INSTITUTIONAL STRENGTH

The ongoing weakening of Turkey's credit profile continues to be primarily driven, as it has over the past four years, by the deterioration in the country's institutional strength. The government appears still to be focused on short-term measures, to the detriment of effective monetary policy and of fundamental economic reform.

Faltering institutional strength is reflected in a broad range of adverse outcomes on the economic, financial and political front despite strong near-term growth rates and healthy public finances. Inflation has stayed stubbornly in the double digits -- the highest inflation rates seen in nine years. It is unlikely to fall to single digits on a sustained basis until 2020 at the earliest. Both the 2018-20 Medium Term Program as well as the 11th 5-year National Development Plan, which will start next year, assume average inflation consistently above the central bank's medium-term inflation target of 5%. The explicit tolerance of high inflation in these plans demonstrates the priority accorded to short-term growth regardless, it appears, of the medium-term consequences.

The erosion of Turkey's executive institutions has continued with the government's ongoing activities to remove suspected sympathizers with the Gülen movement blamed for 2016's coup attempt and the ongoing state of emergency. The undermining of the authority of the judiciary is illustrated by the government's refusal to honor a Constitutional Court ruling to release certain political prisoners, and a lower court later sentenced the prisoners to life terms in prison. Deep divisions in Turkish society were evident in the campaign before the referendum on the constitutional amendments last April and the vote itself. Those amendments -- which will eliminate the office of the prime minister and very significantly expand the authority of the president when they become effective next year, with limited checks and balances -- are likely to undermine the predictability and therefore the effectiveness of policymaking.

Moreover, while the authorities have registered some successes on the structural reform front, such as auto-enrollment in company-run pension plans, legislation to restrict foreign currency lending to companies and the recent submission of a draft value-added tax reform to parliament, progress has been slow to date. Government officials continue to postpone the implementation of more comprehensive structural reforms, such as to address rigidities in the labor market, in advance of the 2019 elections. As a consequence, while growth has exceeded expectations in recent months, medium-term growth expectations remain below historical experience and imbalances are growing, as evidenced by the large current account deficit and double-digit inflation. While the fiscal deficit and the government's debt burden remain contained in the near-term, the willingness to support short-term growth through fiscal stimulus rather than through more sustainable economic reform signals future fiscal challenges. And, although the unemployment rate has dropped since 2016, it remains high at about 10%, with the jobless rate among youth twice as high.

SECOND DRIVER: INCREASED RISK OF EXTERNAL SHOCK DUE TO HIGH EXTERNAL DEBT AND POLITICAL RISKS

Set against the negative institutional backdrop, Turkey's external position, debt and rollover needs have continued to worsen. Although the government's own external borrowing needs are relatively low, the country as a whole has very large external financing needs given sizeable current account deficits, maturing long-term debt and high levels of short-term debt. This external exposure has continued to grow over the past year and is expected to continue to do so. The country's foreign exchange buffers are very low compared to these needs; the country's External Vulnerability Indicator is expected to rise to well over 200%, which is extremely high in comparison to Turkey's rating peers, and signals an ever-rising exposure to changes in international investor sentiment.

The potential triggers of a re-evaluation of Turkish country risk by foreign investors continue to multiply with the continuing deterioration of Turkey's geopolitical situation, its already strained domestic politics and the prospects of monetary policy tightening in the more developed economies. Amplifying its vulnerability to external shock are Turkey's political risks, with the convergence of risks from the geopolitical arena and domestic politics. On the domestic front, as described above, the government's legal crackdown since the failed coup in July 2016 has taken a negative toll on the investment climate and relations between Turkey and the US and EU.

In Moody's view, the geopolitical risk arising from Turkey's recent engagement in Syria becomes more marked the longer and deeper the engagement goes on. Turkey's involvement in the Syrian conflict and battle against ISIS spilled over into heightened domestic terrorism in recent years, which has been damaging to tourism and hence economic stability (tourism being an important source of export revenues) and confidence. While tourism is now reviving strongly, the full normalization of the sector remains vulnerable to political and security risks.

This overall picture suggests that the possibility of a sudden, disruptive reversal in foreign capital inflows, a more rapid fall in already inadequate FX reserves and, in a worst-case scenario, a balance of payments crisis, while still quite low, has increased beyond Moody's expectations a year ago. The larger the external indebtedness becomes, the less comfort can be taken from the country's historical ability to attract large amounts of foreign capital, and the greater the exposure to shifts in investor sentiment due to political risks or global monetary tightening. Such shifts could also worsen the quality and shorten the maturity of such capital inflows, a trend already witnessed in 2017.

RATIONALE FOR THE STABLE OUTLOOK

The rationale for assigning a stable outlook to the rating is that the Ba2 rating appropriately balances the further erosion of Turkey's institutional strength and its increased susceptibility to event risks discussed above, against the country's economic and fiscal strengths stemming from its large and robust economy and favorable government debt metrics. Turkey's economy is highly dynamic, although last year's growth was well above the pace expected in 2018-19. Moody's now believes that Turkey's potential growth rate is around 3.5%-4%, although this is below the government's estimate of 5% or more.

Fiscal strength, as illustrated by the debt and debt affordability metrics, remains favorable relative to many peers, with a general government gross debt to GDP ratio estimated at about 28% at end-2017 compared to the median of about 46% for Ba-rated peers. Although central government spending increased rapidly last year thanks to the fiscal stimulus, revenue also increased in line with the fast growth in nominal GDP, so the deficit came in below the government's forecasts both nominally and as a share of GDP. Moody's anticipates a somewhat bigger deficit this year and next but given the expected increase in nominal GDP, the debt to GDP ratio is not expected to deteriorate.

The growth of contingent liabilities outside of the budget, such as the Public-Private Partnerships (PPPs) or the Credit Guarantee Fund, is a reversal of reforms that were undertaken in the 2000s after the 2001 financial crisis. Moody's considers that Turkey's exposure to PPPs, its costs of military campaigns and its plans for borrowing against the collateral of the Turkish Sovereign Wealth Fund lack full transparency, but also that the related contingent liabilities plus Treasury's explicit debt guarantees are relatively small and manageable for now.

WHAT COULD CHANGE THE RATING UP/DOWN

Potential upward movement in Turkey's issuer rating is constrained by its high external vulnerability. Upward rating pressure could materialize in the event of structural reductions in these vulnerabilities, i.e. a significant and sustained narrowing of the current account deficit or an elongation of the banking and corporate sector's external debt structure. Also important would be material improvements in Turkey's institutional environment or productivity. Reductions in political risk emanating either from the geopolitical or domestic political environment, while credit positive, would not necessarily result in upward rating actions in the absence of sustainable improvements in external vulnerability.

Turkey's sovereign rating would likely be downgraded if there is a material increase in the probability and proximity of a balance of payments crisis relative to what is implied by the current Ba2 rating. Such an event would likely be precipitated by a reduction in foreign exchange reserves or prolonged capital outflows. Sustained lower growth and a related worsening in the government's fiscal strength could also precipitate downward rating pressure, as could a further erosion of institutional strength and policy predictability.

GDP per capita (PPP basis, US$): 24,986 (2016 Actual) (also known as Per Capita Income)

Real GDP growth (% change): 3.2% (2016 Actual) (also known as GDP Growth)

Inflation Rate (CPI, % change Dec/Dec): 8.5% (2016 Actual)

Gen. Gov. Financial Balance/GDP: -1.7% (2016 Actual) (also known as Fiscal Balance)

Current Account Balance/GDP: -3.8% (2016 Actual) (also known as External Balance)

External debt/GDP: 46.9% (2016 Actual)

Level of economic development: Moderate level of economic resilience

Default history: At least one default event (on bonds and/or loans) has been recorded since 1983.

On 02 March 2018, a rating committee was called to discuss the rating of the Turkey, Government of. The main points raised during the discussion were: The issuer's institutional strength/framework, have materially decreased. The issuer has become increasingly susceptible to event risks.

The principal methodology used in these ratings was Sovereign Bond Ratings published in December 2016. 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.

UPDATE TO TURKEY'S NATIONAL SCALE RATINGS

Moody's Investors Service has today also published an updated to the National Scale Ratings (NSR) map for Turkey in conjunction with the downgrade of the government's long-term issuer rating. Moody's NSRs are ordinal rankings of creditworthiness relative to other credits within a given country, which offer enhanced credit differentiation among local credits. NSRs are generated from Global Scale Ratings (GSRs) through correspondences, or maps, specific to each country. However, unlike GSRs, Moody's NSRs are not intended to rank credits across multiple countries. Instead, they provide a measure of relative creditworthiness within a single country. The full maps can be found in "National Scale Rating Maps by Country", published on 7 March 2018.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt 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.

Kristin Lindow
Senior Vice President
Sovereign Risk Group
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

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

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.
© 2018 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 ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MOODY’S PUBLICATIONS MAY INCLUDE 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 AND MOODY’S 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. CREDIT RATINGS AND MOODY’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S 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 AND MOODY’S 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 OR MOODY’S 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.

CREDIT RATINGS AND MOODY’S 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 the Moody’s 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 SUCH RATING OR 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 rating, agreed to pay to Moody’s Investors Service, Inc. for appraisal and rating services rendered by it fees ranging from $1,500 to approximately $2,500,000. MCO and MIS also maintain policies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS 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. It would be reckless and inappropriate for retail investors to use MOODY’S credit ratings or publications when making an investment decision. If in doubt you should contact your financial or other professional adviser.

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 rating, agreed to pay to MJKK or MSFJ (as applicable) for appraisal and rating services rendered by it fees ranging from JPY200,000 to approximately JPY350,000,000.

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