August 3, 2012 / 6:25 AM / in 5 years

TEXT-S&P: Japan-Based Aeon's Domestic Straight Bonds Rated 'A-'

(The following was released by the rating agency)

TOKYO (Standard & Poor‘s) Aug. 3, 2012 -- Standard & Poor’s Ratings Services today said that it had assigned its ‘A-’ issue rating to the 17th and 18th series of senior unsecured straight bonds issued by Japan-based retailer Aeon Co. Ltd. (A-/Negative/--). The issue amount of the series 17 bonds is JPY20 billion, due on Aug. 9, 2019, with a coupon rate of 0.72%; and that of the series 18 bonds is JPY20 billion, due on Aug. 9, 2022, with a coupon rate of 1.15%.

The rating on Aeon reflects the company’s leading position and strong brand recognition in Japan’s retail market; its strong managerial leadership and ability to make swift improvements to operations; and its strong performance in nonretail businesses such as shopping center development and financial services, which has somewhat helped the company diversify its earnings base. Constraints on the rating include difficult conditions in the retail industry, reflecting intense competition and Japan’s sluggish economy; the company’s lower profitability than that of its overseas peers, though it has been improving; and the prospect of the company’s financial profile remaining weak for the current rating over the next one to two years based on its persistently high debt. RELATED CRITERIA AND RESEARCH General Criteria: Principles Of Credit Ratings, Feb. 16, 2011 2008 Corporate Criteria: Analytical Methodology, April 15, 2008

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