Moody's has also affirmed the Aaa (sf) rating of the Series One Class A Unsecured Notes and the Caa2 (sf) rating of the Class C Unsecured Notes.
Deal Name: Synthetic CLO of Regional Financial Institutions (Clover, LLC.)
Issuer: Clover, LLC.
JPY1,900,000,000 Series One Class A Unsecured Notes, affirmed at Aaa (sf);
Previously on 3 March 2011, assigned Aaa (sf).
JPY578,646,000 Series One Class B Unsecured Notes, upgraded to A3 (sf);
Previously on 3 March 2011, assigned Baa2 (sf).
JPY175,928,000 Series One Class C Unsecured Notes, affirmed at Caa2 (sf);
Previously on 3 March 2011, assigned Caa2 (sf).
Issue Date: 11 March 2011
Final Maturity Date: 28 May 2014
Reference Obligation: Loans to small and medium-sized enterprises (SMEs) in Japan
Originator/First CDS Buyer/Servicer: THE SAIKYO SHINKIN BANK, Toyama Shinkin Bank, KITAISEUENO SHINKIN BANK, Osaka Shinkin Bank, The Awaji Shinkin Bank
First CDS Seller/Second CDS Buyer: Japan Finance Corporation (JFC, Aa3)
Second CDS Seller: Clover, LLC.
Independent Auditor: Tokyo Kyodo Accounting Office
Note Trustee/Initial Deposit Bank: Mizuho Corporate Bank, Ltd. (Mizuho Corporate Bank, A1/P-1)
Calculation Agent: Mizuho Trust & Banking Co., Ltd.
Arranger: Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.
The notes represent a synthetic CLO transaction referencing corporate loans for small and medium-sized enterprises (SME). These loans were originated by 5 financial institutions with the intention of securitizing them under a "purchase scheme" program of the Japan Finance Corporation (JFC).
The rating upgrade of the Class B Unsecured Notes reflects increased credit enhancement due mainly to deal amortization.
Moody's affirmed the rating of the Class A Unsecured Notes at Aaa (sf) because the increased credit enhancement is enough to support the highest rating, which is Aaa (sf).
Moody's affirmed the rating of the Class C Unsecured Notes at Caa2 (sf), given its low credit enhancement level and the outstanding amount of delinquencies.
The main factor for the uncertainty in Moody's analysis is the macroeconomic environment for SMEs, as well as the financing environment.
The Japanese economy is weak following the slowdown in the global economy. Although the business environment for SMEs is also weakening, government support for SME financing remains strong, as highlighted by favorable measures, such as the SME Moratorium Law, Safety Net Guarantee Program (No.5), Disaster-Recovery-Related Emergency Guarantee and Special Lending Programs.
Thus, the number of corporate bankruptcies is now at its lowest in 10 years.
As for the performance of the transaction, there were 8 delinquencies (approximately JPY188 million) in September, with one credit event so far. This performance is worse than Moody's initial expectation.
However, as a result of referencing loan amortization, the subordination ratio* for the Class B Notes rose to 38.8% in September 2012 from 21.1% in March 2011.
*The formula used to calculate the subordination in this transaction is Y/Z, where "Y" equals the outstanding principal amount of the Class C Notes subordinated to the Class B Notes and the total amount of the credit protection threshold**, and "Z" equals the current reference obligation amount.
**The Originators will individually hold the credit protection threshold amounts and use them to cover losses incurred on the loans that they themselves have originated (the "sub-pool"). The credit protection threshold amounts cannot be used to cover losses incurred against other sub-pools.
Moody's increased the expected credit event rate for the referencing pool to 4.0% (annualized) from 2.9%, given the delinquencies so far and the current business environment for SMEs. Moody's also assumes a zero recovery rate from a credit event.
In its rating analysis, Moody's takes into account expected credit event rates, outstanding delinquent loans, and changes in credit enhancement, including current subordination, using the CDOROM model.
If the annualized credit event rate were to increase from 4.0% to 6.0%, the model outputs for Class A, B and C would change from Aaa to Aa1 (Class A); from A3 to Baa3 (Class B); from Caa2 to Caa3 (Class C).
The principal methodology used in this rating was "Moody's Approach to Rating Japan SME CDOs" published on 30 September 2010, and available on www.moodys.co.jp.
Moody's did not receive or take into account a third party due diligence report on the underlying assets or financial instruments related to the monitoring of this transaction in the past six months.
The Global Scale Credit Ratings on this press release that are issued by one of Moody's affiliates outside the EU are endorsed by Moody's Investors Service Ltd., One Canada Square, Canary Wharf, London E 14 5FA, UK, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that has issued a particular Credit Rating is available on www.moodys.com.
For ratings issued on a program, series or category/class of debt, this announcement provides relevant 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 relevant 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 relevant 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 www.moodys.com.
For an explanation of the (sf) indicator, please see "Moody's Structured Finance Rating Scale" on www.moodys.com.
The principal information used to prepare the credit rating comprised Summary Report by JFC.
Information sources used to prepare the credit rating are the following: parties involved in the ratings (Originators and CDS Seller); public information; and confidential and proprietary Moody's information.
Measures taken to ensure the quality of this information include representations and warranties provided by the information sources.
Moody's considers the quality of information available on the rated entity, obligation or credit satisfactory for the purposes of issuing a rating.
Moody's adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.
Credit ratings are Moody's current opinions of the relative future credit risk of entities, credit commitments, or debt or debt-like securities. Moody's defines credit risk as the risk that an entity may not meet its contractual, financial obligations as they come due and any estimated financial loss in the event of default. Credit ratings do not address any other risk, including but not limited to: liquidity risk, market value risk, or price volatility. Credit ratings do not constitute investment or financial advice, and credit ratings are not recommendations to purchase, sell, or hold particular securities. No warranty, express or implied, as to the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any such rating or other opinion or information is given or made by Moody's in any form or manner whatsoever. The credit risk of an issuer or its obligations is assessed based on information received from the issuer or from public sources. Moody's may change the rating when it deems necessary. Moody's may also withdraw the rating due to insufficient information, or for other reasons.
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.
Please see ratings tab on the issuer/entity page on the Moody's website for the last rating action and the rating history.
The date on which some Credit Ratings were first released goes back to a time before Moody's Credit Ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on the Moody's website for further information.
Please see the Credit Policy page on the Moody's website for the methodologies used in determining ratings, further information on the meaning of each rating category and the definition of default and recovery.
Shinji Yoshizawa Analyst Structured 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 Koji Kumamaru MD - Structured Finance Structured 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.
CREDIT RATINGS ARE MOODY'S JAPAN K. K.'S ("MJKK") CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MJKK DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL, FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. CREDIT RATINGS DO NOT CONSTITUTE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS ARE NOT RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. CREDIT RATINGS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MJKK ISSUES ITS CREDIT RATINGS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.
ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT. All information contained herein is obtained by MOODY'S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided "AS IS" without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process. Under no circumstances shall MOODY'S have any liability to any person or entity for (a) any loss or damage in whole or in part caused by, resulting from, or relating to, any error (negligent or otherwise) or other circumstance or contingency within or outside the control of MOODY'S or any of its directors, officers, employees or agents in connection with the procurement, collection, compilation, analysis, interpretation, communication, publication or delivery of any such information, or (b) any direct, indirect, special, consequential, compensatory or incidental damages whatsoever (including without limitation, lost profits), even if MOODY'S is advised in advance of the possibility of such damages, resulting from the use of or inability to use, any such information.
The ratings, financial reporting analysis, projections, and other observations, if any, constituting part of the information contained herein are, and must be construed solely as, statements of opinion and not statements of fact or recommendations to purchase, sell or hold any securities. Each user of the information contained herein must make its own study and evaluation of each security it may consider purchasing, holding or selling. NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER.
MJKK is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody's Overseas Holdings Inc., a wholly-owned subsidiary of Moody's Corporation(MCO). MJKK is a credit rating agency registered with the Japan Financial Services Agency and its registration number is FSA Commissioner (Ratings) No. 2.
MJKK hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK have, prior to assignment of any rating, agreed to pay to MJKK for appraisal and rating services rendered by it fees ranging from JPY200,000 to approximately JPY350,000,000. MCO and MJKK also maintain policies and procedures to address the independence of MJKK's ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MJKK and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading "Shareholder Relations - Corporate Governance - Director and Shareholder Affiliation Policy."
Any publication into Australia of this document is by MOODY'S affiliate, Moody's Investors Service Pty Limited ABN 61 003 399 657, which holds Australian Financial Services License no. 336969. This document is intended to be provided only to "wholesale clients" within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY'S that you are, or are accessing the document as a representative of, a "wholesale client" and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to "retail clients" within the meaning of section 761G of the Corporations Act 2001.
This credit rating is an opinion as to the creditworthiness or a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors. It would be dangerous for retail investors to make any investment decision based on this credit rating. If in doubt you should contact your financial or other professional adviser.
Heute im Fokus
Erste Bilder aufgetaucht: Google bringt neue Smartphones auf den Markt. American Express-Aktie steigt: Anleger erhalten mehr Dividende. Lufthansa-Aktie verliert: Aufsichtsrat entscheidet wohl zu Air-Berlin-Deal. EZB und Chinas Notenbank verlängern Währungsswap um drei Jahre.
Diese Aktien stehen auf den Verkauflisten der Experten
Das sind die reichsten Nichtakademiker in Europa