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Rating Action:

Moody's takes rating actions on five Tunisian banks

22 Aug 2017

Rating actions follow downgrade of the Tunisian sovereign rating

Limassol, August 22, 2017 -- Moody's Investors Service ("Moody's") has today downgraded to B1 from Ba3 the long-term local currency deposit ratings of Arab Tunisian Bank (ATB), Banque Internationale Arabe de Tunisie (BIAT) and Banque de Tunisie (BdT) while also downgrading the long-term local currency deposit ratings of Amen Bank (Amen) and Société Tunisienne de Banque (STB) to B2 from B1. Moody's also changed the outlook on the long-term deposit ratings of ATB to negative from stable, and maintained a negative outlook on the long-term deposit ratings of the four other banks.

At the same time, Moody's has downgraded the baseline credit assessments (BCAs) of ATB and BdT to b2 from b1, the BCA of BIAT to b3 from b2, the BCA of Amen to caa1 from b3 and Moody's has affirmed the BCA of STB at caa3. Also, the adjusted BCA of ATB has been downgraded to b1 from ba3.

Moody's has also today downgraded to B2 from B1 the long-term foreign currency deposit ratings of all banks, which is at the same level as the country ceiling for foreign currency deposits.

Lastly, Moody's has downgraded the long-term Counterparty Risk Assessment (CR Assessment) of ATB to Ba3(cr) from Ba2(cr) and the CR Assessment of the four other Tunisian banks to B1(cr) from Ba3(cr).

Today's actions on the Tunisian banks follows Moody's downgrade of the Tunisian government's issuer rating to B1 negative from Ba3 negative on 18 August 2017 (please see 'Moody's downgrades Tunisia's rating to B1, maintains negative outlook' https://www.moodys.com/research/--PR_371312). The sovereign action primarily reflects deterioration in the country's fiscal position and institutional strength. Underpinning these challenges are a difficult operating environment characterised by low economic growth, inflationary pressures, low private investment and delayed structural reforms that Moody's expect will impact the sustainability of banks' credit growth and profitability whilst funding and liquidity are tight. As a result, Moody's has lowered the banking Macro Profile of Tunisia to "Very Weak +" from "Weak -", which in turn drives a lower standalone credit profile (BCA) for some banks.

The negative outlook on the banks' ratings reflects the potential further weakening of Tunisia government's support capacity, as implied by the negative outlook on the government's issuer rating, and the potential further weakening in operating conditions for the banks beyond our current assumptions.

Details of the rationales for individual bank rating actions are provided later in the press release.

A full list of affected ratings is provided towards the end of this press release.

RATINGS RATIONALE

RATING DOWNGRADES

- REDUCED TUNISIA GOVERNMENT SUPPORT CAPACITY FOR AMEN, BIAT, BDT AND STB

The downgrade on the deposit ratings of Amen, BIAT, BdT and STB reflects Moody's view of a deterioration in the government's capacity to provide support to the banks if needed, even if its willingness to support remains unchanged. Tunisia's fiscal deficits widened to 6.1% in 2016 (from 4.8% in 2015) and public debt increased to 62% of GDP in 2016 (from 55% in 2015), increasing the debt service burden.

This action is in line with the downgrade of Tunisia sovereign rating to B1 from Ba3. The key drivers for the decision to downgrade the sovereign rating are (1) structural deterioration in Tunisia's fiscal strength and reduced visibility about external funding sources; (2) persistent external imbalances with a continued drawdown of foreign exchange reserves; and (3) reduced institutional strength as highlighted by the track record of reform implementation delays and reduced room for policy manoeuvre.

All five Tunisian banks' long-term foreign currency deposit ratings have also been downgraded to B2 from B1, reflecting the lowering of Tunisia's country ceiling on foreign-currency bank deposits to B2 from B1, which reflects the risk that the government would freeze foreign-currency deposits during a crisis to conserve scarce foreign-currency resources.

- DOWNGRADE OF BCAs REFLECTS LOWERING OF THE TUNISIA MACRO PROFILE

The downgrades of the affected banks' BCAs primarily reflect the expected impact of the weakening operating environment on the banks' credit and funding conditions. To capture these system-wide risks, Moody's lowered Tunisia's Banking Macro Profile to "Very Weak +" from "Weak --"and assessed each bank's resilience to the weakening domestic operating environment.

Public finance and external account imbalances, combined with worsening social tensions and delays in the implementation of structural reforms will impact consumption, contain investment and potentially introduce volatility in monetary conditions, posing risks to the banks' credit and funding conditions. These challenges are exacerbated by weak underwriting standards, which lead to industry and single-name concentrations, inaccurate collateral valuations, an inefficient recovery environment and regulatory forbearance measures that allow for under provisioning. Meanwhile, an interest rate cap mechanism prevents banks from accurately pricing the risk of individual loans.

On the funding and liquidity side, the high dependence of the banks to collateralized central bank funding constrains their creditworthiness, since such reliance raises refinancing risk in the context of constrained government finances, and creates significant balance sheet maturity mismatches. Furthermore, the fact that banks tend to invest an increasing portion of the proceeds in government debt securities further increases the correlation of the banks' creditworthiness with their weak sovereign while the secured nature of the funding encumbers the banks' liquid assets, thereby reducing their flexibility in a stress situation. Central bank funding grew to around 7.6% of the banking system liabilities as of February 2017, from 0.6% in 2010.

Further bank specific detail is given below.

BANK BY BANK SUMMARY OF ACTIONS

- Amen Bank (Amen)

Moody's downgraded Amen's long-term local-currency and foreign-currency deposit ratings to B2 from B1 and its BCA to caa1 from b3. At the same time, the rating agency maintained the negative outlook on the bank's long-term deposit ratings.

The downgrade of the long-term deposit ratings reflects the Tunisian government's weakened capacity to support banks as detailed above, and the increasing downside risks from the weak operating environment on the bank's credit and funding conditions.

Following the downgrade, the bank's long-term local-currency deposit rating still benefits from two notches of uplift from its caa1 BCA, reflecting Moody's assessment of very high probability of government support in case of need, given Amen's importance with a market share of around 11% of deposits in Tunisia. The negative outlook on Amen's long-term deposit ratings reflects the potential future reduction in Tunisia's government creditworthiness, as indicated by the negative outlook on the sovereign rating.

Amen's caa1 BCA reflects (1) weak asset quality, combined with low loan-loss coverage; (2) modest profitability that will remain challenged by the interest rate cap, high cost of funding and increasing provisioning requirements; (3) the bank's relatively weak capital buffers; and (4) tight liquidity profile as well as high reliance on central bank funding.

The bank's long-term CR Assessment has been downgraded to B1(cr) from Ba3(cr). The CR Assessment is positioned three notches above the BCA of caa1, reflecting Moody's view that the probability of default on the bank's senior obligations is lower than that of deposits. Moody's believes senior obligations represented by the CR Assessment are more likely to be preserved by actions taken by regulatory authorities in order to limit contagion, minimise losses and avoid disruption of critical functions.

- Arab Tunisian Bank (ATB)

Moody's downgraded ATB's long-term local-currency deposit ratings to B1 from Ba3 and its BCA to b2 from b1. Moody's also downgraded the bank's foreign currency deposit ratings to B2 from B1, positioned at Tunisia's B2 country ceiling for foreign currency deposits, which captures foreign currency transfer and convertibility risks. At the same time, the rating agency changed the outlook on the bank's long-term deposit ratings to negative from stable.

The downgrade of the long-term local-currency deposit rating reflects the increasing downside risks from the weak operating environment on the bank's credit and funding conditions.

The B1 local-currency deposit rating incorporates one notch of parental uplift from ATB's b2 BCA, based on Moody's assessment of a moderate probability of parental support from Arab Bank PLC (long-term foreign currency deposits B2 stable, long-term local currency deposits Ba2 stable, BCA ba2), the bank's 64% shareholder. The local-currency deposit rating does not incorporate any government support uplift, as it is already at the government rating level.

The negative outlook on ATB's long-term deposit ratings reflects primarily the increased sensitivity of the bank's b2 BCA and b1 adjusted BCA to further weakening in the operating environment, after asset quality metrics of the bank deteriorated in 2016. ATB's NPLs to total loans ratio stood at 7.7% as of December 2016, up from 7.4% in 2015, primarily driven by two years of high NPL formation. Moody's expects this asset quality pressures will in turn increase cost of risk pressures and increase constrains on the bank's profitability.

ATB's b2 BCA is driven by (1) the bank's relatively weak asset quality and high credit concentrations; (2) the bank's profitability which is constrained by the interest rate cap mechanism, pressure on funding costs amid intense competition for deposits in Tunisia and a relatively high cost of risk; (3) moderate capital buffers, which partly mitigate the bank's high levels of asset concentration; and (4) good liquidity buffers (liquid assets accounted for 22.1% of total assets as of December 2016) supported by a stable deposit funding base and a moderate leverage compared to domestic peers.

The bank's long-term CR Assessment has been downgraded to Ba3(cr) from Ba2(cr). The CR Assessment is positioned two notches above the BCA of b2, reflecting Moody's view that the probability of default on the bank's senior obligations is lower than that of deposits. Moody's believes senior obligations represented by the CR Assessment are more likely to be preserved by actions taken by regulatory authorities in order to limit contagion, minimise losses and avoid disruption of critical functions.

- Banque Internationale Arabe de Tunisie (BIAT)

Moody's downgraded BIAT's long-term local-currency deposit ratings to B1 from Ba3 and its BCA to b3 from b2. Moody's also downgraded the bank's foreign currency deposit ratings to B2 from B1, positioned at Tunisia's B2 country ceiling for foreign currency deposits, which captures foreign currency transfer and convertibility risks. At the same time, the rating agency maintained the negative outlook on the bank's long-term deposit ratings.

The downgrade of the long-term deposit ratings reflects the Tunisian government's weakened capacity to support banks as detailed above, and the increasing downside risks from the weak operating environment on the bank's credit and funding conditions.

Following the downgrade, the bank's long-term local-currency deposit rating still benefits from two notches of uplift from its b3 BCA, reflecting Moody's assessment of very high probability of government support in case of need, given BIAT's importance with a market share of around 16% of deposits in Tunisia. The negative outlook on BIAT's long-term deposit ratings reflects the potential future reduction in Tunisia's government creditworthiness.

BIAT's b3 BCA reflects (1) resilient profitability that benefits from improved efficiency and diversified sources of revenues; (2) the bank's good liquidity buffers, underpinned by its market position as Tunisia's leading private bank, which translates into a strong deposit-gathering ability; (3) the bank's modest loss absorption capacity, with a tangible common equity (TCE)-to-risk weighted assets (RWA) ratio of 8.1% as of December 2016; and (4) its weak asset quality.

The bank's long-term CR Assessment has been downgraded to B1(cr) from Ba3(cr). The CR Assessment is positioned two notches above the BCA of b3, reflecting Moody's view that the probability of default on the bank's senior obligations is lower than that of deposits. Moody's believes senior obligations represented by the CR Assessment are more likely to be preserved by actions taken by regulatory authorities in order to limit contagion, minimize losses and avoid disruption of critical functions.

- Banque de Tunisie (BdT)

Moody's downgraded BdT's long-term local-currency deposit ratings to B1 from Ba3 and its BCA to b2 from b1. Moody's also downgraded the bank's foreign currency deposit ratings to B2 from B1, positioned at Tunisia's B2 country ceiling for foreign currency deposits, which captures foreign currency transfer and convertibility risks. At the same time, the rating agency maintained the negative outlook on the bank's long-term deposit ratings.

The downgrade of the long-term deposit ratings reflects the Tunisian government's weakened capacity to support banks, and the increasing downside risks from the weak operating environment on the bank's credit and funding conditions.

Following the downgrade, the bank's long-term local-currency deposit rating still benefits from one notch of uplift from its b2 BCA reflecting Moody's assessment of high probability of government support in case of need.

The negative outlook on BdT's long-term deposit ratings reflects the potential future reduction in Tunisia's government creditworthiness.

BdT's b2 baseline credit assessment (BCA) is underpinned by its sound capital buffers and prudent risk management compared with other Tunisian banks, combined with stable profitability. These strengths are moderated by the bank's elevated asset quality pressures in a still challenging operating environment, and a funding structure that is to some extent reliant on central bank funding.

The bank's long-term CR Assessment has been downgraded to B1(cr) from Ba3(cr). The CR Assessment is positioned one notch above the BCA of b2, reflecting Moody's view that the probability of default on the bank's senior obligations is lower than that of deposits. Moody's believes senior obligations represented by the CR Assessment are more likely to be preserved by actions taken by regulatory authorities in order to limit contagion, minimize losses and avoid disruption of critical functions.

- Société Tunisienne de Banque (STB)

Moody's downgraded STB's long-term local-currency and foreign-currency deposit ratings to B2 from B1 and affirmed the bank's caa3 BCA. At the same time, the rating agency maintained the negative outlook on the bank's long-term deposit ratings.

The downgrade of the long-term deposit ratings reflects the Tunisian government's weakened capacity to support banks as detailed above.

Following the downgrade, the bank's long-term local-currency deposit rating still benefits from four notches of uplift from its caa3 BCA, reflecting Moody's assessment of very high probability of government support in case of need, given STB's importance to the Tunisian financial system as the largest of the three public-sector banks with a market share of around 11% of deposits and the 83.4% direct and indirect ownership by the Tunisian government.

The affirmation of STB's caa3 BCA reflects its resilience to increased downside risks in the Tunisian banking operating, although banks' credit and funding performance could also be negatively affected.

The negative outlook on STB's long-term deposit ratings reflects the potential future reduction in Tunisia's government creditworthiness.

STB's caa3 BCA reflects (1) the bank's high level of problem loans, driven by historically weak underwriting standards and concentrated exposure to the troubled tourism sector; (2) low profitability and weak loss-absorption capacity, despite the bank's recent recapitalizations; (3) a challenged deposit base and low liquidity buffers; and (4) weak internal audit and reporting systems.

The bank's long-term CR Assessment has been downgraded to B1(cr) from Ba3(cr). The CR Assessment is positioned five notches above the BCA of caa3, reflecting Moody's view that the probability of default on the bank's senior obligations is lower than that of deposits. Moody's believes senior obligations represented by the CR Assessment are more likely to be preserved by actions taken by regulatory authorities in order to limit contagion, minimize losses and avoid disruption of critical functions.

RATIONALE FOR NEGATIVE OUTLOOK

Moody's has maintained the negative outlooks on Amen, BIAT, BdT and STB in line with the negative outlook on the government's rating. The outlook for ATB has been changed to negative from stable.

For the first four banks, the negative outlooks signal mainly the risk of further weakening in Tunisia's credit profile, which in turn weakens the government's capacity to provide support to banks in times of stress if needed.

In the case of ATB, the change in outlook reflects primarily the increased sensitivity of the bank's creditworthiness to a further weakening in the operating environment, after asset quality metrics of the bank deteriorated in 2016. ATB's problem loans to total loans ratio stood at 7.7% as of December 2016, up from 7.4% in 2015, primarily driven by two years of high problem loan formation. Moody's expects this asset quality pressures will in turn increase cost of risk pressures and increase constrains on the bank's profitability.

WHAT COULD CHANGE THE RATINGS -- UP/DOWN

Given the negative outlook on Tunisian banks, there is currently no upwards rating pressure. The negative outlook could be changed to stable for Amen, BIAT, BdT and STB on evidence of economic and fiscal improvements in Tunisia, as a change in Tunisia's sovereign outlook to stable would imply. The negative outlook on ATB's ratings could be changed following a reduction in the bank's problem loans and/or an improvement in the bank's capacity to build up risk-absorption buffers.

A downgrade of the Tunisia government's issuer rating would weigh on the Amen, BIAT, BdT and STB's ratings as it would signal further deterioration in the government's capacity to provide support to banks in case of need. Although ATB's B1 rating may be less sensitive to a downgrade of Tunisia government's issuer rating, given that its adjusted b1 BCA would remain supported by our expectation of support from Arab Bank PLC (long-term foreign currency deposits B2 stable, long-term local currency deposits Ba2 stable, BCA ba2), the bank's ratings would be negatively affected by any further weakening in the operating environment on its solvency profile.

LIST OF AFFECTED RATINGS

Issuer: Amen Bank

Downgrades:

....LT Bank Deposits (Local & Foreign Currency), Downgraded to B2 from B1, Outlook Remains Negative

....Adjusted Baseline Credit Assessment, Downgraded to caa1 from b3

....Baseline Credit Assessment, Downgraded to caa1 from b3

....LT Counterparty Risk Assessment, Downgraded to B1(cr) from Ba3(cr)

Affirmations:

....ST Bank Deposits (Local & Foreign Currency), Affirmed NP

....ST Counterparty Risk Assessment, Affirmed NP(cr)

Outlook Actions:

....Outlook, Remains Negative

Issuer: Arab Tunisian Bank

Downgrades:

....LT Bank Deposits (Local Currency), Downgraded to B1 from Ba3, Outlook Changed To Negative From Stable

....LT Bank Deposits (Foreign Currency), Downgraded to B2 from B1, Outlook Changed To Negative From Stable

....Adjusted Baseline Credit Assessment, Downgraded to b1 from ba3

....Baseline Credit Assessment, Downgraded to b2 from b1

....LT Counterparty Risk Assessment, Downgraded to Ba3(cr) from Ba2(cr)

Affirmations:

....ST Bank Deposits (Local & Foreign Currency), Affirmed NP

....ST Counterparty Risk Assessment, Affirmed NP(cr)

Outlook Actions:

....Outlook, Changed To Negative From Stable

Issuer: Banque de Tunisie

Downgrades:

....LT Bank Deposits (Local Currency), Downgraded to B1 from Ba3, Outlook Remains Negative

....LT Bank Deposits (Foreign Currency), Downgraded to B2 from B1, Outlook Remains Negative

....Adjusted Baseline Credit Assessment, Downgraded to b2 from b1

....Baseline Credit Assessment, Downgraded to b2 from b1

....LT Counterparty Risk Assessment, Downgraded to B1(cr) from Ba3(cr)

Affirmations:

....ST Bank Deposits (Local & Foreign Currency), Affirmed NP

....ST Counterparty Risk Assessment, Affirmed NP(cr)

Outlook Actions:

....Outlook, Remains Negative

Issuer: Banque Internationale Arabe de Tunisie

Downgrades:

....LT Bank Deposits (Local Currency), Downgraded to B1 from Ba3, Outlook Remains Negative

....LT Bank Deposits (Foreign Currency), Downgraded to B2 from B1, Outlook Remains Negative

....Adjusted Baseline Credit Assessment, Downgraded to b3 from b2

....Baseline Credit Assessment, Downgraded to b3 from b2

....LT Counterparty Risk Assessment, Downgraded to B1(cr) from Ba3(cr)

Affirmations:

....ST Bank Deposits (Local & Foreign Currency), Affirmed NP

....ST Counterparty Risk Assessment, Affirmed NP(cr)

Outlook Actions:

....Outlook, Remains Negative

Issuer: Societe Tunisienne de Banque

Downgrades:

....LT Bank Deposits (Local & Foreign Currency), Downgraded to B2 from B1, Outlook Remains Negative

....LT Counterparty Risk Assessment, Downgraded to B1(cr) from Ba3(cr)

Affirmations:

....ST Bank Deposits (Local & Foreign Currency), Affirmed NP

....Adjusted Baseline Credit Assessment, Affirmed caa3

....Baseline Credit Assessment, Affirmed caa3

....ST Counterparty Risk Assessment, Affirmed NP(cr)

Outlook Actions:

....Outlook, Remains Negative

PRINCIPAL METHODOLOGY

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

The Local Market analyst for these ratings is Olivier Panis, +971.4.2379.533.

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.

Melina Skouridou, 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
Client Service: 44 20 7772 5454

Sean Marion
MD - Financial Institutions
Financial Institutions Group
JOURNALISTS: 44 20 7772 5456
Client Service: 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
Client Service: 44 20 7772 5454

No Related Data.
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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.

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