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Moody's rates BTMU JPY senior unsecured bonds at Aa3

July 17, 2014



-- Moody's Japan K.K. has assigned its Aa3 ratings to the senior unsecured bonds issued by The Bank of Tokyo-Mitsubishi UFJ, Ltd. (BTMU). The rating outlook is stable.

These are takedowns from the bank's JPY1.2 trillion domestic shelf registration (effective 27 December 2013), which is rated (P)Aa3.

The bond issues are:

 Series 157 JPY10 billion domestic senior unsecured bond, due 24 July,

2017

 Series 158 JPY30 billion domestic senior unsecured bond, due 24 July,

2019

 Series 159 JPY5 billion domestic senior unsecured bond, due 23 July,

2021

 Series 160 JPY5 billion domestic senior unsecured bond, due 24 July,

2024

RATINGS RATIONALE

The Aa3 ratings of BTMU incorporate a three-notch uplift from the bank's baseline credit assessment (BCA) of a3, due to our assessment of the very high probability of systemic support in times of stress, given the bank's importance to Japan's financial system.

BTMU's C standalone bank financial strength rating (BFSR) -- equivalent to a BCA of a3 -- reflects our overall assessment of the bank's: (1) valuable franchise in Japan's retail/wholesale banking markets; (2) strong liquidity; (3) strong capital base compared to domestic peers; (4) high risk positioning due to decreasing but still large Japanese equity holdings, concentrated corporate credit exposures, as well as the interest-rate risk in its banking book; and (5) low profitability versus global peers due partly to the persistently low interest rate environment in Japan.

BTMU's long-term ratings are based on our overall assessment of the bank on a standalone basis, as well as our analysis of MUFG on a group consolidated basis.

Because the Aa3 rating for BTMU is at the same level as the rating of

Japanese government bonds (JGBs), an upgrade is unlikely in the near

term. However, upward pressure on BTMU's the baseline credit assessments

could occur over time if BTMU: (1) Boosts its profitability, such that

its net income to average risk-weighted assets exceeds 2%; and (2)

Successfully executes its strategy of diversifying its business lines and

geographic segments, such that it reduces the volatility of its earnings

through business cycles.


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Source: EMBIN (Emerging Markets Business Information News)


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