News Column

Moody's assigns Aa3 to Urban Renaissance Agency's domestic bonds

June 9, 2014



Moody's Japan K.K. has assigned Aa3 ratings to

bonds issued by Urban Renaissance Agency (URA). The rating outlook is

stable.

The bond issuances are:

 JPY 10 billion Series 90 bonds, due 2017

 JPY 10 billion Series 91 bonds, due 2019

 JPY 20 billion Series 92 bonds, due 2024

 JPY 20 billion Series 93 bonds, due 2029

RATINGS RATIONALE

The rating Aa3 reflects URA's strong links with the government of Japan

(Aa3, stable).

The creditworthiness of URA reflects that of the sovereign, given its

importance to the government's urban development and housing policy, as

well as the high level of credit support from, and the heavy involvement

of, the government in its operations.

URA was established in 2004 as an independent administrative

corporation(IAC) under the general law for IAC and the URA law.

The law establishing URA stipulates that the Japanese government must

provide financial support to the entity through capital injections. The

government also provides explicit guarantees for URA's debt, as well as

direct loans to the entity.

The law also states that the entity's capital must be held by the central

and local governments. Currently, URA is 99.8%-owned by the central

government, with the remaining shares held by the local governments.

Strong oversight provisions are detailed in the IAC law which states that

the Ministry of Land, Infrastructure and Transport (MLIT) must set URA's

business objectives and approve its medium-term plan. The plan is

required to include detailed budgets, funding plans and requirements for

cash-flow borrowings. Any change to the plan requires the approval of

MLIT. A committee established by MLIT also evaluates the extent to which

the objectives set out in the plan have been achieved.

As a result of this close oversight of the entity's activities, the

government would be aware well in advance of any developing fiscal

problems and therefore be able to intervene if required.

The principal methodology used in this rating was Government-Related

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

Credit Policy page on www.moodys.com for a copy of this methodology.

Urban Renaissance Agency is an independent administrative corporation

(IAC) established in July 2004 in accordance with government efforts to

reform public corporations. Its headquarter is in Kanagawa prefecture.


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Source: EMBIN (Emerging Markets Business Information News)


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