Moody’s Ratings has described Norinchukin Bank’s recent efforts to bolster its capital as “credit positive,” even though the Japanese lender remains under review for a potential downgrade. The agency stated on Monday that these capital-raising measures have “no immediate impact” on the bank’s long-term debt rating of A1, which is the fifth-highest investment grade.
Norinchukin Bank recently reported a significant ¥413 billion ($2.9 billion) loss for the fiscal first quarter, driven by the sale of unprofitable bonds. In response, the bank is in the process of raising approximately ¥1.3 trillion from farming cooperatives to strengthen its capital base.
Moody’s highlighted that this capital-raising initiative underscores the robust support from the bank’s member cooperatives during challenging times.
However, a potential downgrade by Moody’s could elevate Norinchukin’s borrowing costs, which currently surpass the returns on much of its foreign bond holdings. Additionally, S&P Global Ratings has downgraded its outlook on the bank’s debt to negative, citing concerns over earnings risks.
