News Column

Moody's assigns A1 to Norinchukin Bank's Series 770 debenture

July 17, 2014



Moody's Japan K.K. has assigned an A1 rating to the Norinchukin Bank's Series 770 debenture. The rating outlook is stable.

The specific bond issue rated is:

 JPY37 billion Series 770 senior unsecured debenture, due 2019

RATINGS RATIONALE

The A1 ratings incorporate a three-notch uplift from the bank's baseline credit assessment (BCA) of baa1, due to our assessment of the "very high"

probability of systemic support, given the bank's importance as the central financial organization for Japan's agricultural, forestry, and fishery cooperatives (JAs) and the prefectural banking federations of agricultural cooperatives (shinnoren).

Norinchukin's C- bank financial strength rating (BFSR) -- equivalent to a BCA of baa1 -- reflects our overall assessment of the bank's (1) strong franchise as the central financial organization for Japan's agricultural, forestry, and fishery cooperatives, (2) strong liquidity firmly backed by solid and sticky deposits from its member JAs and shinnoren, (3) high risk positioning due to sizeable foreign securities investments and the diversity of its market investment portfolio, and (4) significant sensitivity to market movements of its capital structure.

Factors that could move the rating upwards include, but are not limited to, the following: explicit management commitment to control and keep its capital volatility within a minimal range for a sustained period.

Factors that could move the rating downwards include, but are not limited

to, the following: (1) deviation of its earnings from its target set in

the "Medium-Term Management Plan"; (2) the bank fails to maintain stable

Tier 1 capital amounts and/or ratios as a result of the deterioration of

its investment securities portfolio; (3) failure of the JAs or shinnoren,

resulting in depositor losses or substantial financial assistance from

Norinchukin; or (4) signs of Norinchukin's reduced importance as a

central institution for Japan's agricultural, forestry, and fishery

cooperatives.


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Source: EMBIN (Emerging Markets Business Information News)


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