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Moody’s Views Norinchukin Bank’s Capital Measures as Positive, Despite Downgrade Review

by Ivy

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.

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Moody’s highlighted that this capital-raising initiative underscores the robust support from the bank’s member cooperatives during challenging times.

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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.

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