to JPY-denominated senior unsecured bonds issued by
(MHBK). The rating outlook is stable.
This is a takedown from the bank's
The bond issuance is:
The A1 rating of MHBK incorporates a three-notch uplift from the bank's
baseline credit assessment (BCA) of baa1, due to our assumption of a very
high probability of systemic support for MHBK -- one of two main
subsidiary banks of
the group's importance to
financial group by total assets, and therefore the low degree of
substitutability. Mizuho's other main subsidiary bank is
Banking Co., Ltd. (A1 stable).
The C- standalone bank financial strength rating (BFSR) -- equivalent to
a BCA of baa1 -- reflects our overall assessment of the bank's: (1)
strong domestic client base and leading positions in
wholesale markets; (2) its high concentration risk in Japanese corporate
credit, and its equity risk relative to earnings; and (3) its recovering
but still modest financial fundamentals.
The long-term ratings of Mizuho's two main subsidiary banks are at the
same rating level, based on our assessment that: (1) they are closely
inter-connected and under the management of Mizuho; (2) their capital
management is centralized at the holding company level; and (3) they have
close inter-bank support relationships.
The Mizuho banks' long-term ratings are determined by our overall
assessment of the banks on a standalone basis, as well as Mizuho's
financial position on a group consolidated basis.
Given the two-notch upward change of the stand-alone credit profile in
uplift in line with our guidelines, upward pressure on the ratings is
For the Mizuho banks' ratings to be eventually upgraded, Moody's
considers the following factors as crucial: (1) a further improvement in
Mizuho's capital adequacy, such that its common equity Tier 1 (CET1)
ratio (Basel III fully-loaded basis) exceeds 8% on a sustained basis,
while maintaining its stable and solid liquidity profile; (2) an
improvement in Mizuho's profitability, such that there is a sustainable
increase in the ratio of pre-provision profits versus risk-weighted
assets to above 1.5%; and (3) the ongoing disposal of highly volatile and
risky assets, such as Japanese equities. Even if these factors are
exceeded, Moody's would also need to see an improvement in Mizuho's
metrics relative to both its domestic and global peers, in order to
consider an upgrade.
Downward pressure on the ratings would include: (1) a bottom-line annual
loss owing to unexpected developments, such as a default by
including Mizuho, among its biggest creditors, or a sharp increase in
interest rates; and (2) a downgrade of
this may lead to further reassessment of the capacity of
its large banking system.
largest financial group in
under its umbrella:
Ltd. (a custodial bank),
brokerage), as well as a number of other entities, which together
provide a comprehensive array of financial services.
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