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Rating Action:

Moody's takes rating actions on 11 Saudi banks; concludes review

16 May 2016

Bank rating actions follow downgrade of the Saudi Government

Limassol, May 16, 2016 -- Moody's Investors Service (Moody's) has today concluded its review for downgrade on the ratings of 11 Saudi banks initiated on March 7, 2016 by downgrading the long-term deposit ratings of nine banks and confirming the ratings of two banks. All ratings carry a stable outlook.

Today's rating actions on the banks follow Moody's downgrade of Saudi Arabia's government issuer rating on May 14, 2016 to A1 (stable) from Aa3, which concluded the review for downgrade of the sovereign rating that was initiated on March 4, 2016. The sovereign action reflects the ongoing negative impact of lower oil prices on Saudi's fiscal position and economic strength (please see "Moody's downgrades Saudi Arabia's government issuer rating to A1 with stable outlook, concluding review for downgrade" https://www.moodys.com/research/--PR_347912 ).

The rating downgrades of nine Saudi banks reflect, to differing degrees, a combination of: 1) the reduced fiscal capacity of the Saudi government to provide support to the banks in times of stress, if needed; and 2) an assessment of each bank's resilience to the weakening domestic operating environment, which Moody's expects will dampen funding, asset quality and profitability in the coming quarters. The nine banks are SAMBA Financial Group (SAMBA), Banque Saudi Fransi (BSF), Saudi British Bank (SABB), Arab National Bank (ANB), Riyad Bank (Riyad), Saudi Hollandi Bank (SHB), Saudi Investment Bank (SAIB), Bank AlBilad (BAB) and Bank Al-Jazira (BAJ).

In addition, Moody's also confirmed the deposit ratings of Al Rajhi Bank (ARB) and National Commercial Bank (NCB), reflecting the rating agency's expectation of the resilience of the banks' deposit ratings at their current levels to the aforementioned pressures.

These actions conclude the review for downgrade on Saudi bank ratings that was initiated on March 7, 2016 (see https://www.moodys.com/research/--PR_344695).

Please click on this link http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_189936 for the List of Affected Credit Ratings. This list is an integral part of this Press Release and identifies each affected issuer.

RATINGS RATIONALE

Please click on this link http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_189936 for the List of Affected Credit Ratings. This list is an integral part of this Press Release and provides, for each of the credit ratings covered, Moody's disclosures on the following items:

• Methodologies Used

• Local Market Analyst

- REDUCED SAUDI GOVERNMENT SUPPORT

The primary driver of today's downgrades of the nine Saudi banks' deposit ratings is the reduced capacity of the government to provide support to the banks in the event of need, as indicated by the downgrade of the sovereign rating to A1 (Stable) from Aa3 (Ratings Under Review) on May 14, 2016.

The drop in oil prices from their mid-2014 peaks has materially undermined the Kingdom's credit profile, negatively affecting the economy and the government's finances. While the government has ambitious and comprehensive plans to address the shock by diversifying its economic and fiscal base, those plans are at an early stage of development. According to Moody's estimates, the general government fiscal balance recorded a deficit of 14.9% of GDP in 2015, following a deficit of 2.3% in 2014, and the rating agency expects a similarly-sized deficit this year. Although the fiscal balance will likely improve gradually over the coming four years, Moody's expects an average deficit of 9.5% of GDP between 2016 and 2020, requiring cumulative financing of SAR1.2 trillion ($324 billion or almost 50% of estimated nominal GDP in 2015). This will allow for less financial flexibility to provide support in the event of need than Moody's previously assumed, which in turn exerts pressure on the banks' ratings.

In conjunction with the reduced capacity of the government to provide support in the event of need, Moody's also notes that the tightening fiscal position of the government increases the risk that the government could become more selective when considering the recapitalization of distressed banks, potentially favouring the larger, more complex and more systemically important banks over comparatively smaller ones. In assessing the likelihood of support to individual banks, Moody's has considered recent policy measures, such as the published capital regime for 'domestic systematically important banks' (or so-called D-SIB), which classifies banks on the basis of their systemic importance.

Accordingly, in addition to capturing the weaker capacity of the government to provide support in its assumptions for all Saudi banks, Moody's has also reduced the probability it attaches to the likelihood of government support for four smaller and less systemically important banks in Saudi Arabia to "high" from "very high" in the agency's classification (see bank-by-bank summary further below).

WEAKENING OPERATING ENVIRONMENT

In certain cases, the downgrades also reflect the expected impact of the weakening operating environment on Saudi banks' funding, asset quality and profitability metrics. Moody's lowered Saudi Arabia's Banking Macro Profile to 'Moderate+' from 'Strong-', to capture these system-wide risks, and assessed each bank's resilience to the weakening domestic operating environment. In various cases, Moody's expectation that funding, asset quality and profitability will be under pressure over the coming quarters triggered a downgrade in the banks' standalone baseline credit assessments (BCAs).

Credit conditions for banks in Saudi Arabia are weakening, in Moody's view, as prolonged low oil prices will lead to lower economic growth and government spending. Moody's expects real economic growth over the next five years to average only 2%, a fall from the 5% annual average level recorded in 2011 to 2015. In this context, Moody's expects lower deposit inflows, weaker credit growth and a tightening of liquidity in the economy more generally, which will in turn increase asset quality pressure for all banks across the system, albeit to varying degrees.

To assess the resilience of banks individually, Moody's considered their respective business strategies and loss-absorbing buffers. For six of the 11 Saudi banks, Moody's has concluded that their standalone credit profiles were more sensitive to the economic downturn and consequently downgraded their baseline credit assessments (BCA) by one notch. The affected banks are: BSF and SABB (to a3 from a2); NCB, Riyad and ANB (baa1 from a3) as well as SHB (baa2 from baa1).

The bank-by-bank summary below includes additional detail on the idiosyncratic credit characteristics of each bank affected by today's rating action.

BANK-BY-BANK SUMMARY OF ACTIONS

- SAMBA - Moody's downgraded SAMBA's deposit rating to A1 from Aa3. The bank's standalone BCA was confirmed at a2. The outlook on the ratings is stable.

The key driver for the downgrade of Samba's deposit rating is the Saudi government's weakened capacity to provide support to the banks in case of need (as indicated by the downgrade of the sovereign rating to A1 (Stable) from Aa3 (Ratings Under Review) on May 14, 2016). Moody's did not revise its assessment of the government's willingness to provide support to SAMBA, maintaining a 'very high' support assumption from the government, reflecting the bank's large market share, government ownership, complexity and financial interconnectedness. The BCA of SAMBA was confirmed at a2 and continues to be underpinned by the bank's strong buffers to withstand Moody's expected deterioration in the operating environment, in particular the bank's: (1) very strong liquidity buffers, with a ratio of liquid assets-to-tangible banking assets of 37% as of year-end 2015 and the lowest adjusted net loan-to-deposit ratio in the Saudi system at 76% as of year-end 2015, which positions the bank well to defend its franchise and margins compared with peers whose growth is constrained by the regulatory LDR limit of 90% (note that we report LDRs as per the Saudi regulator's definition in this press release, which includes long-term borrowings); and (2) one of the strongest capital ratios in the system with a tangible common equity (TCE)-to-risk-weighted assets (RWAs) of 19.3% as of year-end 2015 and resilient profitability metrics, supported by a strong corporate culture and risk management. These positive factors are moderated by the bank's large funding and credit concentrations, which are systemic issues in Saudi Arabia.

- Bank Saudi Fransi -- Moody's downgraded BSF's deposit rating to A1 from Aa3 and the bank's standalone BCA to a3 from a2. The outlook on the ratings is stable.

The key driver for the downgrade of BSF's deposit rating is the Saudi government's weakened capacity to provide support to the banks in case of need, as indicated by the sovereign downgrade. Moody's did not revise its assessment of the government's willingness to provide support to BSF, maintaining a 'very high' support assumption from the government, reflecting the bank's large market share, government ownership, complexity and financial interconnectedness. The BCA of BSF was also downgraded by one notch, owing to the more difficult operating environment, which Moody's expects will lead to a modest increase in nonperforming loans (NPLs). The liquidity tightening in the system will also constrain the ability of the bank to grow its loans without having recourse to higher-cost funding sources given an adjusted LDR of 83% as of year-end 2015. Nevertheless, BSF's a3 BCA remains high by global standards, underpinned by the bank's: (1) resilient profitability (with a ratio of net income-to-tangible assets of 2.2% as of year-end 2015), derived from a well-established and defendable corporate banking franchise; (2) consistently strong asset quality metrics (with a ratio of problem loans to gross loans of 0.9% as of year-end 2015) although moderated by high asset concentrations; (3) solid capital buffers, with a TCE ratio of 14.8% as of year-end 2015; and (4) sound but concentrated and weakening deposit funding profile (with a low recourse to market funding representing only 6.3% of tangible banking assets), as well as high liquidity levels.

- Saudi British Bank -- Moody's downgraded SABB's deposit rating to A1 from Aa3 and the bank's standalone BCA to a3 from a2. The outlook on the ratings is stable.

The key driver for the downgrade of SABB's deposit rating is the Saudi government's weakened capacity to provide support to the banks in case of need, as indicated by the sovereign downgrade. Moody's did not revise its assessment of the government's willingness to provide support to SABB, maintaining a 'very high' support assumption from the government, reflecting the bank's large market share, government ownership, complexity and financial interconnectedness. The BCA of SABB was also downgraded by one notch, owing to the more difficult operating environment, which Moody's expects will lead to a modest increase in NPLs. The liquidity tightening in the system will also constrain the ability of the bank to grow its loans without having recourse to higher cost funding sources given an adjusted LDR of 81% as of year-end 2015, close to the regulatory limit. Nevertheless, SABB's a3 BCA remains high by global standards, driven by the bank's: (1) resilient funding profile, with one of the lowest reliance on market funding in the system at 1.5% of tangible assets; (2) solid profitability (with a ratio of net income-to-tangible assets of 2.3% as of year-end 2015) and efficiency, underpinned by a strong corporate banking franchise in the country; (3) strong capitalisation with a TCE ratio of 15.6% as of year-end 2015; and (4) overall sound quality of its asset portfolio although moderated by its concentration level.

- Arab National Bank - Moody's downgraded ANB's deposit rating to A2 from A1 and the bank's standalone BCA to baa1 from a3. The outlook on the ratings is stable.

The key driver for the downgrade of ANB's deposit rating is the Saudi government's weakened capacity to provide support to the banks in case of need, as indicated by the sovereign downgrade Moody's did not revise its assessment of the government's willingness to provide support to ANB, maintaining a 'very high' support assumption from the government, reflecting the bank's large market share, government ownership, complexity and financial interconnectedness. The BCA of ANB was also downgraded by one notch, owing to the more difficult operating environment, which Moody's expects will lead to a further modest increase in NPLs, which have already increased slightly to 2.8% of gross loans as of year-end 2015 (2014: 2.5%). The liquidity tightening in the system will also constrain the ability of the bank to grow its loans without having recourse to higher cost funding sources given an adjusted LDR of 84% as of year-end 2015, close to the regulatory limit. Nevertheless, ANB's baa1 BCA remains high by global standards, underpinned by the bank's: (1) solid deposit-funding profile, with a low 3.5% ratio of market funding-to-tangible banking assets as of year-end 2015; and (2) strong solvency position supported by its robust profitability and strong capital, with a 13.9% TCE-to-RWAs ratio as of year-end 2015.

- Riyad Bank -- Moody's downgraded Riyad's deposit rating to A2 from A1 and the bank's standalone BCA to baa1 from a3. The outlook on the ratings is stable.

- The key driver for the downgrade of Riyad's deposit rating is the Saudi government's weakened capacity to provide support to the banks in case of need, as indicated by the sovereign downgrade. Moody's did not revise its assessment of the government's willingness to provide support to Riyad, maintaining a 'very high' support assumption from the government, reflecting the bank's large market share, government ownership, complexity and financial interconnectedness. The BCA of Riyad was also downgraded by one notch, owing to the more difficult operating environment, which Moody's expects will lead to a modest increase in NPLs. The liquidity tightening in the system will also constrain the ability of the bank to grow its loans without having recourse to higher cost funding sources, given an adjusted LDR of 84% as of year-end 2015, close to the regulatory limit. Nevertheless, Riyad's baa1 BCA remains supported by the bank's: (1) robust, albeit moderating, profitability metrics, with ratio of net profits-to-tangible assets of 1.8% as of year-end 2015, underpinned by the bank's solid franchise in multiple business lines; (2) solid asset quality with a ratio of problem loans-to-gross loans of 1.2% as of year-end 2015; and (3) strong capital base (TCE ratio of 16% as of year-end 2015) and liquidity reserves, mitigated by large funding and credit concentrations.

- Saudi Hollandi Bank - Moody's downgraded SHB's deposit ratings to A3/ Prime-2 from A1/ Prime-1 and the bank's standalone BCA to baa2 from baa1. The outlook on ratings is stable.

The key driver for the downgrade of SHB's deposit ratings is the Saudi government's weakened capacity to provide support to the banks in case of need, as indicated by the sovereign downgrade. Moody's also revised its assessment of the government's willingness to provide support to SHB, to a 'high' support assumption from the government, from 'very high', balancing its smaller market share and more limited interconnectedness compared to larger peers with the fact that it remains an important bank in a country that has a track record of supporting banks in time of stress. The BCA of SHB was also downgraded by one notch, owing to the more difficult operating environment, which Moody's expects will lead to a modest increase in NPLs, as well as SHB's relatively small franchise and developing retail banking business that leads to higher credit and deposit concentrations and lower non-interest bearing deposits than its local peers. SHB's baa2 BCA remains underpinned by the bank's: (1) healthy deposit-funded profile, with a low 1.4% ratio of market funding-to-tangible banking assets as of year-end 2015; (2) strong profitability with a net income-to-tangible assets ratio of 1.9% as of year-end 2015; and (3) moderate capitalisation, with a TCE-to-RWAs ratio of 11.8% as of year-end 2015, which supports the bank's capacity to absorb losses.

- Saudi Investment Bank - Moody's downgraded SAIB's deposit ratings to A3/ Prime-2 from A2/ Prime-1. The bank's standalone BCA was confirmed at baa2. The outlook on the ratings is stable.

The key driver for the downgrade of SAIB's deposit ratings is the Saudi government's weakened capacity to provide support to the banks in case of need, as indicated by the sovereign downgrade. Moody's also revised its assessment of the government's willingness to provide support to SAIB, to a 'high' support assumption from the government, from 'very high', balancing its smaller market share and more limited financial interconnectedness compared to larger peers with the fact that it remains an important bank in a country that has a track record of supporting banks in time of stress. The BCA of SAIB was confirmed at baa2 and continues to be underpinned by the bank's: (1) deposit-funded profile and strong liquidity levels, with a liquid assets-to-tangible banking assets ratio of 31% as of year-end 2015, supported by its established, albeit small, corporate banking franchise; and (2) solid capitalisation with a TCE-to-RWAs ratio of 14.2%. These positive factors are moderated by the bank's modest retail presence, which drives a lower retail deposit base and earnings generation capacity, as well as large funding and credit concentrations.

- Bank AlBilad -- Moody's downgraded BAB's deposit ratings to A3/ Prime-2 from A2/ Prime-1. The bank's standalone BCA was confirmed at baa2. The outlook on the ratings is stable.

The key driver for the downgrade of BAB's deposit ratings is the Saudi government's weakened capacity to provide support to the banks in case of need, as indicated by the sovereign downgrade. Moody's also revised its assessment of the government's willingness to provide support to BAB, to a 'high' support assumption from the government, from 'very high', balancing its smaller market share and more limited financial interconnectedness compared to larger peers with the fact that it remains an important bank in a country that has a track record of supporting banks in time of stress. The BCA of BAB was confirmed at baa2 and continues to be underpinned by the bank's: (1) young and growing Islamic banking franchise, supported by a strong and resilient remittance business; (2) low ratio of problem loans at 1.5% of gross loans as of year-end 2015 and solid coverage metrics; and (3) solid capitalisation levels underpinned by solid profitability metrics and profit retention. These strengths are moderated by still relatively weak efficiency metrics and high asset growth.

- Bank Al-Jazira -- Moody's downgraded BAJ's deposit rating to Baa1 from A3. The bank's standalone BCA was confirmed at baa3.The outlook on the ratings is stable.

The key driver for the downgrade of BAJ's deposit rating is the Saudi government's weakened capacity to provide support to the banks in case of need, as indicated by the sovereign downgrade. Moody's also revised its assessment of the government's willingness to provide support to BAJ, to a 'high' support assumption from the government, from 'very high', balancing its smaller market share and more limited financial interconnectedness compared to larger peers with the fact that it remains an important bank in a country that has a track record of supporting banks in time of stress. The BCA of BAJ was confirmed at baa3 and continues to be underpinned by the bank's: (1) small and growing Islamic banking franchise; (2) low profitability (with a ratio of net income-to-tangible assets of 1.3% as of year-end 2015) and capitalisation pressured by the asset growth; (3) low ratio of problem loans at 1.1% and solid coverage metrics; and (4) high borrower concentrations, exposing the bank to event risk.

- National Commercial Bank - Moody's confirmed NCB's A1 deposit rating. The bank's standalone BCA was downgraded to baa1 from a3. The outlook on the ratings is stable.

The key driver for the confirmation of the A1 deposit rating of NCB is Moody's view that support will remain 'very high' for the bank. While the BCA of NCB was downgraded by one notch to baa1, the bank's A1 deposit ratings was not affected given that it now benefits from a three-notch systemic support uplift (from two notches previously), reflecting the bank's positioning as the largest bank in the Kingdom, with the largest government ownership among Saudi banks, as well as its complexity and financial interconnectedness. The BCA of NCB was downgraded owing to the more difficult operating environment, which Moody's expects will lead to an increase in NPLs, partly from the increased challenges faced by its Turkish subsidiary (loans in Turkey account for 14.5% of net loans as of year-end 2015), and the bank's relatively high concentration levels in funding and assets. Nevertheless, NCBs' baa1 BCA remains underpinned by the bank's: (1) strong funding and liquidity profile, with a ratio of liquid assets-to-tangible banking assets of 35% as of year-end 2015, underpinned by Saudi Arabia's largest deposit franchise; and (2) overall strong solvency position, including solid capitalisation with a TCE-to-RWAs ratio of 12.9% as of year-end 2015, and solid profitability.

- Al Rajhi Bank -- Moody's confirmed ARB's A1 deposit rating and the bank's standalone BCA of a3 The outlook on the ratings is stable.

The key driver for the confirmation of the A1 deposit rating of ARB and its BCA of a3 is underpinned by Moody's view that the Saudi government's willingness to provide support to Al Rajhi will remain 'very high' given the bank's franchise position as one of the largest banks in the kingdom serving a large Saudi retail customer base, while Moody's also expects the bank's standalone credit profile (a3 BCA) will be resilient despite the weakening operating environment. In particular, Moody's notes the bank's dominant and granular retail franchise (particularly with Saudi citizens) on both loans and deposits, which positions the bank favourably at a time of liquidity tightening. Most notably, the bank features a low cost of funding (supported by current and saving accounts representing around 94% of the customer deposits), high profitability (underpinned by a high 3% net interest margin as of year-end 2015) and a stable and granular funding base. The bank's BCA also remains supported by strong asset quality and capital metrics.

RATINGS OUTLOOK

Moody's has assigned a stable outlook to the ratings of all 11 banks, in line with the stable outlook on the government's ratings. This also reflects the resilience of the banks' ratings at their current levels to the challenging operating conditions that Moody's expects in Saudi Arabia over the next twelve to eighteen months.

WHAT COULD CHANGE THE RATINGS -- UP/DOWN

Upwards pressure could develop primarily from an improvement in the operating environment that would relax the current pressures on credit conditions, increase business confidence and lead Moody's to review its deteriorating projections of asset quality.

Downwards pressure on Saudi banks' ratings could develop from: (1) further lowering of the sovereign rating, which would lead to reduced support capacity and Moody's potential reassessment of willingness of government support; and/or (2) a material deterioration in the banks' operating environment, resulting in a weakening in their solvency and liquidity metrics.

The principal methodology used in these ratings was Banks published in January 2016. Please see the Ratings Methodologies page on www.moodys.com for a copy of this methodology.

The local market analyst for Al Rajhi Bank, Bank Al-Jazira and Bank AlBilad ratings is Nitish Bhojnagarwala, AVP-Analyst, Financial Institutions Group, Journalist: 44 20 7772 5456, Subscribers: 44 20 7772 5454.

The local market analyst for Banque Saudi Fransi, Riyad Bank and Saudi British Bank ratings is Olivier Panis, VP-Sr Credit Officer, Financial Institutions Group, Journalist: 44 20 7772 5456, Subscribers: 44 20 7772 5454.

REGULATORY DISCLOSURES

Please click on this link http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_189936 for the List of Affected Credit Ratings. This list is an integral part of this Press Release and provides, for each of the credit ratings covered, Moody's disclosures on the following items:

• Releasing Office

• Person Approving the Credit Rating

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.

The ratings of rated entities Riyad Bank and National Commercial Bank were not initiated or not maintained at the request of these rated entities.

v Moody's considers a rated entity or its agent(s) to be participating when it maintains an overall relationship with Moody's. On this basis, Riyad Bank and National Commercial Bank or their agents are considered to be non-participating entities. These rated entities or their agents generally do not provide Moody's with information for the purposes of their ratings process.

Moody's considers a rated entity or its agent(s) to be participating when it maintains an overall relationship with Moody's. On this basis Saudi British Bank or their agents are considered to be participating entities. These rated entities or their agents generally provide Moody's with information for their ratings process.

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.

Christos Theofilou, CFA
Asst Vice President - Analyst
Financial Institutions Group
Moody's Investors Service Cyprus Ltd.
Porto Bello Building
1, Siafi Street, 3042 Limassol
PO Box 53205
Limassol CY 3301
Cyprus
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Sean Marion
Managing Director
Financial Institutions Group
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Releasing Office:
Moody's Investors Service Cyprus Ltd.
Porto Bello Building
1, Siafi Street, 3042 Limassol
PO Box 53205
Limassol CY 3301
Cyprus
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Moody's takes rating actions on 11 Saudi banks; concludes review
No Related Data.
© 2019 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 OR IMPAIRMENT. SEE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S RATINGS. 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.

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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 CREDIT 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 ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. 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.

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 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.

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