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Moody’s changes Nippon Yusen’s A3 rating outlook to negative

Tokyo, June 15, 2009 -- Moody's Investors Service has today changed to 
negative from stable the rating outlook for the long-term issuer ratings 
and senior unsecured ratings of Nippon Yusen Kabushiki Kaisha (NYK, A3) 
and its supported subsidiaries, NYK International plc (A3) and NYK 
Finance (Cayman) Ltd. (Baa1).

The outlook change reflects Moody's concern that NYK's financial leverage
is likely to remain high, given the current stagnant ocean shipping
market and slack air cargo business.

After a brisk period for ocean shipping industry in recent years, mainly 
due to the vital imports and exports by China and other emerging
countries, NYK projects that its operating profit for FYE3/2010 will be 
JPY53 billion, a significant decline from JPY145 billion in the previous 

Moody's understands that this low level of operating profit is due to
NYK's stagnant ocean shipping businesses and the continuous operating
loss from the company's air cargo business, which was consolidated in 
October 2005.

Since the consolidation, Nippon Cargo Airlines Co., Ltd. (NCA), NYK's 
subsidiary for air cargo transportation, has not contributed to the 
group's profitability. In addition, Moody's notes that the capital 
expenditure for restructuring NCA's fleet to become cost efficient has 
been a financial burden for NYK.

Moody's recognizes that engaging in and growing an air cargo 
transportation business is one of the essential components for NYK's 
overall business strategy of becoming an integrated global logistic 
business, which includes ocean shipping, land transportation and air 
cargo. The rating agency believes that NYK's business strategy will help 
further strengthen NYK's stable relationships with its core customers in 
the long term.

However, Moody's is concerned that NYK's intensive capital expenditures
on its shipping and air cargo fleets have been pressuring the company's
financial flexibility, given the stagnant market conditions in both
sectors. Its total debt to total capitalization ratio at end-March 2009 
was around 74% (based on preliminary adjustments), a significant increase 
from 69.5% a year earlier.

Moody's will closely monitor NYK's policy to restore its financial 
profile. NYK's rating will face downward pressure if the company cannot 
take significant enough measures to recover its capital structure within 
the next six months or so.

The last rating action with respect to NYK was implemented on May 11,
2006, when Moody's affirmed the company's A3 ratings.

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