Total programme amount rated is USD5 Billion
Tokyo, November 19, 2012 -- Moody's Japan K.K. has assigned (P)A1/ (P)Prime-1 ratings to the USD5 billion Euro Medium Term Note (EMTN) programme of Mitsubishi Corporation.
The ratings outlook is stable.
The assignment is in response to the addition of MC Finance & Consulting Asia Pte. Ltd. as an issuer of the EMTN programme of Mitsubishi Corporation.
Moody's Japan K.K. has also affirmed, with a stable outlook, the (P)A1/ (P)Prime-1 ratings assigned to the USD5 billion EMTN programme.
The affirmation is in response to the programme's annual renewal.
The ratings are based upon a guarantee provided by Mitsubishi Corporation, which is rated at A1/Prime-1.
These ratings do not immediately apply to any individual notes issued under the programme. Ratings on individual notes issued under the programme are subject to our satisfactory review of the terms and conditions set forth in the final prospectuses, supplements, or offering memorandums of the notes to be issued.
Furthermore, Moody's does not intend to assign the programme rating to individual notes issued under the program with features linked to the performance of another obligor (credit-linked notes) or to notes for which payment of principal and/or interest is variable and contractually dependent on the occurrence of a non-credit-linked event or the performance of an index(non-credit-linked notes), except for notes whose principal and coupon payments are affected by standard sources of variation (see Moody's Rating Methodologies and Implementation Guidance, "Moody's Revised Update on Rating Debt Obligations with Variable Promises," September, 2010).
Mitsubishi's A1 rating incorporates the company's 1) good and sustainable core business franchise; 2) ability to manage volatility in a difficult business environment; 3) unchanged strong funding ability; and 4) good management team.
The rating is also supported by an assessment of the company under stress scenarios, its strong and stable relationships with its main banks and major customers, and its position as a core member of the Mitsubishi group.
Counterbalancing factors influencing the rating decision include 1) the company's high dependence on earnings from its metals and energy groups; and 2) the fundamental business risks inherent in Japanese trading companies; characterized by long-term, illiquid business investments financed by the combination of large debt and equity.
The company's rating could be upgraded if it improves its cash flow stability and asset efficiency. This can be achieved by 1) diversifying away from its heavy reliance of 65% of earnings on the price-sensitive energy and metals resource sectors (as of end-March 2012); 2) strengthening its risk management of assets; and 3) improving financial leverage by generating cash flow.
The company could face downward rating pressure if 1) there is an increase in financial leverage; and 2) if there is a continuing earnings and cash flow deterioration due to the failure to manage risk or investment quality.
Mitsubishi Corporation, headquartered in Tokyo, is one of Japan's largest trading companies.
Mitsubishi Corporation Finance PLC, headquartered in London, is a wholly owned subsidiary of Mitsubishi Corporation.
MC Finance & Consulting Asia Pte. Ltd., headquartered in Singapore, is a wholly owned subsidiary of Mitsubishi Corporation.
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Mina SawamuraAsst Vice President - Analyst Corporate Finance Group Moody's Japan K.K. Atago Green Hills Mori Tower 20fl 2-5-1 Atago, Minato-ku Tokyo 105-6220 Japan JOURNALISTS: (03) 5408-4110 SUBSCRIBERS: (03) 5408-4100 Richard C Bittenbender Associate Managing Director Corporate Finance Group JOURNALISTS: (03) 5408-4110 SUBSCRIBERS: (03) 5408-4100 Releasing Office: Moody's Japan K.K. Atago Green Hills Mori Tower 20fl 2-5-1 Atago, Minato-ku Tokyo 105-6220 Japan JOURNALISTS: (03) 5408-4110 SUBSCRIBERS: (03) 5408-4100 Copyright 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.
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