Fitch Ratings has assigned
MUFG expects the notes to be issued on
The senior unsecured notes will constitute MUFG's direct, unconditional, unsecured and unsubordinated general obligations and rank pari passu without any preference among themselves and with all of MUFG's other unsecured debt, other than subordinated debt. The proceeds may be distributed to the core operating subsidiaries as obligations that rank pari passu with other senior unsecured obligations of the operating subsidiaries.
KEY RATING DRIVERS
The note rating is aligned with MUFG's Long-Term Issuer Default Rating (IDR), in line with Fitch's criteria. Fitch aligns MUFG's holding-company senior debt ratings with the IDRs of its operating companies, despite their structural subordination features. This equalisation reflects Fitch's view of consolidated supervision and that the holding company's failure and senior-level default risk are similar to that of wholly owned operating banks, with all entities being eligible for pre-emptive state support. It also takes into account the group's interconnectedness and low holding-company double leverage.
MUFG's Long-Term IDR is at the same level as its Support Rating Floor (SRF) and its Viability Rating (VR). The VR reflects the banking group's intrinsic credit profile, taking into account the challenging operating environment for Japanese banks, which adds to the pressure on MUFG's asset quality and the group's ability to restore sustainable profitability and generate capital commensurate with its risk appetite. The rating also takes into account MUFG's strong company profile and abundant domestic liquidity. The Stable Outlook on the Long-Term IDR is in line with the Outlook on the
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative rating action/downgrade:
A downgrade of the
Negative rating action could also stem from an unexpected change in the regulatory framework that affects our equalisation approach for holding-company and operating-company ratings and, clearly and significantly raises the loss severity of the notes relative to other senior unsecured debt. This could include changes in the consolidated supervision approach and measures for orderly resolution of financial institutions
Factors that could, individually or collectively, lead to positive rating action/upgrade:
Upgrade on the sovereign ratings could lead to positive rating action on the SRF, the IDRs and senior debt ratings. This is not our base case under a deep global recession.
An upgrade of the VR above the SRF would also result in similar rating action on the IDRs and senior debt ratings, which again is not our base case given the challenging operating environment.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Financial Institutions and Covered Bond issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from '
SUMMARY OF FINANCIAL ADJUSTMENTS
Total assets and total liabilities exclude acceptances and guarantees from
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
RATING ACTIONS
ENTITY/DEBT RATING
senior unsecured
LT A- New Rating
VIEW ADDITIONAL RATING DETAILS
Additional information is available on www.fitchratings.com
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