Bangkok--24 May--Standard & Poor's
Standard & Poor's Ratings Services today said it had assigned its 'AA-' senior unsecured long-term local currency debt rating to the Development Bank of Japan's (DBJ; AA-/Negative/A-1+) Series 37 ?10 billion 1.55% nonguaranteed zaito agency bonds due June 20, 2014.
"The issuer credit ratings on DBJ are based on its role as the governmental financial institution for extending long-term financial facilities in support of projects with high public-policy content, such as technology promotion, environmental conservation, and regional development," said Standard & Poor's credit analyst Takahira Ogawa.
The ratings incorporate the support that DBJ receives from the Japanese government (AA/Stable/A-1+), including capital injections, low-cost funding from the Fiscal Investment and Loan Program (FILP), guarantees for its debt issuance, and managerial support. The Japanese government (the bank's main creditor) has subordinated its lending to DBJ to below the bank's own bonds, as the bank is 100% government-owned and supervised by the Ministry of Finance.
DBJ was established on Oct. 1, 1999, through the merger of Japan Development Bank and Hokkaido-Tohoku Development Finance Public Corp. The bank also assumed the lending functions of two other governmental institutions, Japan Environment Corp. and Japan Regional Development Corp. As a general policy financial institution, DBJ does not specialize in any particular field, unlike other FILP agencies, such as Japan Bank for International Cooperation (AA/Stable/A-1+) and Japan Finance Corp. for Municipal Enterprises (AA/Stable/A-1+). Instead, the lending and investment priorities of the bank are aligned with the government's prevailing economic and social policies. DBJ's profitability is low reflecting its public-policy role.
The negative outlook on the issuer credit rating on DBJ reflects the government's decision in November 2005 to privatize the bank and the resulting possibility of diminishing government support to DBJ. Although the new act on DBJ, which incorporates the necessary amendments to the related laws and a new law to incorporate DBJ, has already been submitted to parliament in February 2007 for discussion, the contents fall short on clearly defining the government's relationship with DBJ after the 100% divestment. While the credit ratings on DBJ will be more dependent on its stand-alone credit strengths following the privatization, the government's level of support for DBJ is still unclear. Standard & Poor's will monitor future developments on DBJ and--depending on factors such as the details of the privatization and the level of future government support to DBJ--will reevaluate and potentially revise its credit ratings on DBJ.
A Japanese-language version of this media release is available on Standard & Poor's Research Online at www.researchonline.jp , or via CreditWire Japan on Bloomberg Professional at SPCJ . Complete ratings information is available to subscribers of RatingsDirect, the real-time Web-based source for Standard & Poor's credit ratings, research, and risk analysis, at www.ratingsdirect.com . All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com ; under Credit Ratings in the left navigation bar, select Find a Rating, then Credit Ratings Search.
Media Contact:
David Wargin, New York (212) 438-1579
[email protected]
Analyst Contacts:
Takahira Ogawa, Singapore (65) 6239-6342
Naoko Nemoto, Tokyo (81) 3-4550-8720
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