November 15, 2012 / 7:01 AM / 5 years ago

TEXT-S&P:Daiwa Securities Group's unsecured bonds rated 'BBB'

(The following statement was released by the rating agency)

Nov 15 - Standard & Poor’s Ratings Services today assigned its ‘BBB’ debt ratings to Daiwa Securities Group Inc.’s (BBB/Negative/A-2) Australian dollar- and U.S. dollar-denominated unsecured straight bonds (see list below).

Daiwa Securities Group is the holding company of the Daiwa Securities group companies. The rating on Daiwa Securities Group is one notch lower than the rating on its core subsidiary, Daiwa Securities Co. Ltd. (BBB+/Negative/A-2), reflecting the subsidiary’s credit quality, as well as Daiwa Securities Group’s structural subordination as the holding company.

Daiwa Securities Group is Japan’s second-largest securities group in terms of consolidated assets under management, boasting a strong domestic customer base and diversified revenue sources. Through its subsidiaries, the group conducts business in areas such as retail securities, wholesale securities, asset management, and investments. Nevertheless, the group’s profits are highly volatile since profits from those businesses are dependent on conditions in the securities markets, and they are also highly interrelated. In addition, the sluggish domestic securities market has put pressure on its profits, making it crucial for the company to improve its revenue and expense structure, in our view. Daiwa Securities Group has adequate capitalization, and the quality of its equity capital is good. The group also maintains adequate liquidity by maintaining a highly liquid asset portfolio. In addition, the group has access to funds supplied against pooled collateral and a complementary lending facility provided by the Bank of Japan. The long-term counterparty credit rating on Daiwa Securities Co. Ltd. is one notch higher than its stand-alone credit profile, based on our assessment that there is moderate likelihood that the company would benefit from extraordinary support from the government in an event of distress.


Issue Rating

A$292.7 mil. 3.80% bonds due Dec. 5, 2016 BBB

US$67 mil. 1.40% bonds due Dec. 5, 2017 BBB


Principles Of Credit Ratings, Feb. 16, 2011

Rating Securities Companies, June 9, 2004

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