News Column

Moody's assigns Aa3 to JFM bonds

June 18, 2014

Moody's Japan K.K. has assigned a Aa3 rating to a

domestic bond issued by the Japan Finance Organization for Municipalities

(JFM). The rating outlook is stable. This issuance does not carry the

government's guarantee.

The bond issuance is:

 JPY 15 billion Series 1 senior secured bonds due 2044


JFM's rating reflects its strong links to the central government, which

leads Moody's to conclude that creditworthiness of JFM should reflect

that of the government, as expressed in the Aa3 rated assigned to JGB


The alignment of JFM's ratings with that of the sovereign reflects the

close integration of JFM's activities with the government, and

specifically, its role as a provider of low-cost funding to Japanese

regional and local governments (RLGs), on behalf of the government. The

significant degree of government involvement in the development of JFM's

business plans, budget, and the formulation and implementation of their

major policies, further evidences the strong ties between the two

entities. In addition, the government determines how much funding will be

allocated by the JFM to the RLGs annually.

As a result, Moody's has adopted a credit substitution approach for JFM,

as well as for 11 other Zaitos, or government-related issuers in Japan.

The principal methodology used in this rating was Government-Related

Issuers: Methodology Update published in July 2010. Please see the

Credit Policy page on for a copy of this methodology.


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

rating action on the support provider and in relation to each particular

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

For any affected securities or rated entities receiving direct credit

support from the primary entity(ies) of this rating action, and whose

ratings may change as a result of this 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.

Moody's Japan K.K. is a credit rating agency registered

with the Japan Financial Services Agency and its registration number is

FSA Commissioner (Ratings) No. 2. The Financial Services

Agency has not imposed any supervisory measures on Moody's Japan K.K.

in the past year.

For more stories on investments and markets, please see HispanicBusiness' Finance Channel

Source: EMBIN (Emerging Markets Business Information News)

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