Japan Finance Corp. for Municipal Enterprises' ¥40 Billion Zaito Agency Bonds Rated 'AA-'
SINGAPORE (Standard & Poor's) Oct. 28, 2005--Standard & Poor's Ratings
Services today assigned its 'AA-' senior unsecured local currency long-term
debt rating to Japan Finance Corp. for Municipal Enterprises' (JFM;
AA-/Stable/A-1+) ¥40 billion 1.57%, Series 17 nonguaranteed bond due Sept. 24,
2015.
Standard & Poor's issuer credit ratings on JFM reflect the corporation's
robust public policy role as the primary governmental financial institution
supplying long-term, low-cost financing for public projects. These projects
include road building, water supply, and sewerage works that are undertaken by
municipal enterprises, local governments, and public corporations established
by local governments.
"Standard & Poor's equalizes its ratings on JFM with those on the
sovereign because the corporation is an integral part of the Japanese
government's overall mechanism for financing local governments and their
municipal enterprises," said Standard & Poor's credit analyst Takahira Ogawa.
"Furthermore, JFM's sole activity to channel the necessary funding to local
public corporations cannot be undertaken easily by private commercial banks,"
he added.
The ratings also incorporate the support that JFM receives from the
central government, including capital injections, guarantees for debt
issuance, and managerial support. JFM is wholly owned and controlled by the
central government.
The size of JFM's operations in each fiscal year are outlined in the
Japanese government's Local Loan Program (LLP) and Fiscal Investment and Loan
Program (FILP), which are drawn up in tandem with the national budget. As the
corporation benefits from close supervision by the Ministry of Internal
Affairs and Communications and Ministry of Finance over local government's
finances, JFM does not have any nonperforming loans (NPLs) in its portfolio.
The risk of possible NPLs, however, is growing as the fiscal strength of local
governments, in general, has been deteriorating.
Complete ratings information is available to subscribers of
RatingsDirect, Standard & Poor's Web-based credit analysis system, at
www.ratingsdirect.com. All ratings affected by this rating action can be found
on Standard & Poor's public Web site at www.standardandpoors.com; under Credit
Ratings in the left navigation bar, select Find a Rating, then Credit Ratings
Search.
| Primary Credit Analyst: | Takahira Ogawa, Singapore (65) 6239-6342; takahira_ogawa@standardandpoors.com |
| Secondary Credit Analyst: | Kumiko Kakimoto, Tokyo (81) 3-4550-8705; kumiko_kakimoto@standardandpoors.com |
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