17.07.2015, 10:59
Fitch Assigns ORIX's USD Senior Notes 'A-(EXP)' Rating
OREANDA-NEWS. Fitch Ratings has assigned Japan-based ORIX Corporation's (ORIX, A-/Stable) US dollar-denominated fixed rate, senior unsecured notes an expected rating of 'A-(EXP)'. The notes are scheduled to be issued on 23 July 2015 and mature on 23 July 2020.
The proceeds will be used for general corporate purposes. The final rating is contingent upon receipt of final documents conforming to information already received.
ORIX, established in 1964, is engaged in a wide range of businesses including leasing, banking, life insurance, asset management, principal investments, real estate, and environment and energy-related businesses. It also has an extensive domestic and global operation network.
KEY RATING DRIVERS
The rating of the notes is aligned with the Long-Term Issuer Default Rating (IDR) of ORIX because they will constitute unsubordinated and unsecured obligations of ORIX, and rank pari passu with all other unsecured and unsubordinated obligations. The IDR reflects ORIX's modest leverage, adequate liquidity position and track record of having remained profitable over the past half century. The IDR also factors in ORIX's opportunistic acquisition and divestment strategy, which has the potential to alter its already-complex business structure.
RATING SENSITIVITIES
The rating on the notes is primarily sensitive to any change to ORIX's IDR, which would be affected by material changes in the company's risk appetite, business complexity, capital and leverage policy, and liquidity position.
An upgrade of ORIX's IDR is unlikely in the medium term, given the only moderate improvement in the operating environment, and the company's structural complexity and opportunistic investment strategy. Furthermore, Fitch does not expect any significant and sustained reduction in leverage or further strengthening of liquidity.
A downgrade of ORIX's IDR would be considered if the company's risk appetite increased without a corresponding strengthening of capital buffers. Negative pressure on the IDR could also be exerted by increased complexity in its business operation rendering risk control more challenging, and substantial deterioration in the company's liquidity position due to internal/external factors such as large cash usages or rapid deterioration in the funding market.
The proceeds will be used for general corporate purposes. The final rating is contingent upon receipt of final documents conforming to information already received.
ORIX, established in 1964, is engaged in a wide range of businesses including leasing, banking, life insurance, asset management, principal investments, real estate, and environment and energy-related businesses. It also has an extensive domestic and global operation network.
KEY RATING DRIVERS
The rating of the notes is aligned with the Long-Term Issuer Default Rating (IDR) of ORIX because they will constitute unsubordinated and unsecured obligations of ORIX, and rank pari passu with all other unsecured and unsubordinated obligations. The IDR reflects ORIX's modest leverage, adequate liquidity position and track record of having remained profitable over the past half century. The IDR also factors in ORIX's opportunistic acquisition and divestment strategy, which has the potential to alter its already-complex business structure.
RATING SENSITIVITIES
The rating on the notes is primarily sensitive to any change to ORIX's IDR, which would be affected by material changes in the company's risk appetite, business complexity, capital and leverage policy, and liquidity position.
An upgrade of ORIX's IDR is unlikely in the medium term, given the only moderate improvement in the operating environment, and the company's structural complexity and opportunistic investment strategy. Furthermore, Fitch does not expect any significant and sustained reduction in leverage or further strengthening of liquidity.
A downgrade of ORIX's IDR would be considered if the company's risk appetite increased without a corresponding strengthening of capital buffers. Negative pressure on the IDR could also be exerted by increased complexity in its business operation rendering risk control more challenging, and substantial deterioration in the company's liquidity position due to internal/external factors such as large cash usages or rapid deterioration in the funding market.
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