OREANDA-NEWS. Fitch Ratings has assigned Japan-based Mizuho Bank's (MHBK, A-/Stable) Thai baht-denominated fixed-rate, senior unsecured notes an expected rating of 'A-(EXP)'.

The proceeds will be used for general operating purposes. The final rating is contingent upon receipt of final documents conforming to information already received.

KEY RATING DRIVERS

The rating of the notes is aligned with the Long-Term Issuer Default Rating (IDR) of MHBK because they will constitute unsubordinated and unsecured obligations of MHBK, and rank pari passu with all other unsecured and unsubordinated obligations.

As MHBK is considered a systemically important financial institution in Japan, its Long-Term IDR is based on sovereign support, in line with the bank's Support Rating Floor (SRF) of 'A-'. This is because the SRF is higher than the bank's Viability Rating (VR) of 'bbb+', which in turn reflects the bank's strong domestic franchise, solid liquidity profile in yen, and sound asset quality. It also considers MHBK's adequate capital, which continues to improve through consistent retained earnings - although profitability remains modest on account of the sustained low interest-rate environment.

RATING SENSITIVITIES

The rating on the notes is primarily sensitive to any change to MHBK's IDRs, which would most likely stem from a downgrade in the bank's SRF. This could be due to a downgrade in Japan's sovereign rating to 'A-' or the sovereign being perceived as less willing to support the bank, providing the bank's VR had not been upgraded. If the latter was to occur, MHBK's IDR would then be underpinned by its VR. An upgrade of the sovereign rating would be unlikely to lead to any upgrade in the bank's SRF.