TEXT-S&P: Three Japan Housing Finance Agency Bonds Rated 'AA-'

Fri Oct 5, 2012 1:59am EDT

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(The following was released by the rating agency)

TOKYO (Standard & Poor's) Oct. 5, 2012--Standard & Poor's Ratings Services today assigned its 'AA-' local-currency long-term debt ratings to the following bond issuances by Japan Housing Finance Agency (JHF; AA-/Negative/A-1+): JPY5.0 billion, 0.815%, 116th nonguaranteed bonds due Sept. 20, 2022; JPY23.0 billion, 1.438%, 117th nonguaranteed bonds due Sept. 17, 2027; and JPY20.0 billion, 1.814%, 118th nonguaranteed bonds due Oct. 15, 2032.

We equalize the ratings on JHF with the ratings on Japan (AA-/Negative/A-1+), based on JHF's critical policy role as Japan's only government-supported entity specializing in housing loan operations and its integral link with the government. We expect JHF to receive ongoing government support under the Japan Housing Finance Agency Law. In addition to ongoing support provided to the entity in the form of guarantees, grants, and capital injections, we expect an "almost certain" likelihood of extraordinary support should such a need arise.

On Jan. 20, 2012, the Cabinet of the government of Japan approved a roadmap to reform the system governing independent administrative agencies, including JHF. Based on this roadmap, the Cabinet Advisory Committee assembled and disclosed its final report on JHF's future in June. Depending on the government's final decision, we will assess how the reform of JHF would impact the ratings on the entity.

RELATED CRITERIA AND RESEARCH

Rating Government-Related Entities: Methodology and Assumptions, Dec. 9, 2010 Ratings On Japan Housing Finance Agency Not Immediately Affected By Cabinet Advisory Committee's Announcement, June 29, 2012

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