OREANDA-NEWS. Tokyo-20 April 2016: Fitch Ratings has affirmed the 'A' rating on Japan-based Mitsubishi UFJ Financial Group, Inc.'s (MUFG, A/Stable) senior unsecured note issue, which was increased to USD7bn from USD5bn. Fitch on 1 March 2016 assigned a final rating to the notes, which were issued out of the banking group's debt programme.

The notes are expected to count towards MUFG's total loss-absorption capacity (TLAC) requirements, which have been set by the Financial Stability Board at 16% of its risk-weighted assets, effective 1 January 2019.

The senior bonds will constitute direct, unconditional, unsecured and unsubordinated general obligations of MUFG and rank pari passu without any preference among themselves and with all of the group's other unsecured indebtedness, other than subordinated indebtedness and except for statutorily preferred indebtedness. The notes will be structurally subordinated to the liabilities of MUFG's subsidiaries, including Bank of Tokyo-Mitsubishi UFJ, Ltd. (BTMU; A/Stable) and Mitsubishi UFJ Trust & Banking Corporation (MUTB; A/Stable).

The proceeds will be down-streamed in full to the operating subsidiaries as obligations that rank pari passu with other senior unsecured obligations of the operating subsidiaries.

KEY RATING DRIVERS

The rating of the notes is aligned with the Long-Term Issuer Default Rating (IDR) of MUFG. MUFG's IDR is based upon its Viability Rating (VR), which reflects the banking group's strong and very sound domestic franchises, solid liquidity profiles in yen, sound asset quality and adequate capital positions, which Fitch expects will continue improving through consistent retained earnings. The rating also considers MUFG's improved capital position, which counters a rising appetite for risk outside Japan, although modest earnings and market risks still expose the group to volatility.

RATING SENSITIVITIES

The rating of the senior unsecured notes issued by MUFG would be directly affected by a change in MUFG's IDRs, which would stem from a change in its VR. However, the rating would also then be underpinned by its 'A-' Support Rating Floor.

Negative action could also stem from an unexpected change in the regulatory framework that clearly and materially increases the loss severity of the notes relative to other senior unsecured debt.

Contact:
Primary Analyst
Naoki Morimura
Director
+81 3 3288 2686
Fitch Ratings Japan Limited
Kojimachi Crystal City East Wing 3F
4-8 Kojimachi, Chiyoda-ku, Tokyo 102-0083

Secondary Analyst
Kaori Nishizawa
Director
+81 3 3288 2783

Committee Chairperson
Mark Young
Managing Director
+65 6796 7229

Media Relations: Wai-Lun Wan, Hong Kong, Tel: +852 2263 9935, Email: wailun.wan@fitchratings.com.

Additional information is available on www.fitchratings.com

Applicable Criteria
Exposure Draft: Global Bank Rating Criteria (pub. 14 Apr 2016)
Global Bank Rating Criteria (pub. 20 Mar 2015)

Additional Disclosures
Dodd-Frank Rating Information Disclosure Form
Solicitation Status
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