Moody’s says it will closely monitor implications of DPJ policies

Tokyo, August 31, 2009 -- Moody's Investors Service says that it will
closely monitor the implications of the policies of the Democratic Party
of Japan (DPJ) -- after its win in Sunday's election over the Liberal
Democratic Party (LDP) -- for Japanese issuers, from corporates to
financials to regional governments.

"At this early stage, we have only the DPJ's party platform to indicate
any possible near-, medium-, or long-term credit impact by category of
debt, so Moody's position is essentially one of wait-and-see," says
Tadashi Usui, a Moody's Vice President -- Senior Analyst.

"As written, the DPJ's platform would -- for example -- make the credit
link between Japan's major highway system and the government stronger,
and affect the credit quality of some other government-related entities.
Moreover, the effect on the credit quality of regional governments would
be neutral," says Usui.

The DPJ's electoral win on Sunday by landslide was only the second time
that the LDP has lost power in 53 years.

"Moody's further notes that to eliminate waste and help fund ambitious
social-spending programs, the DPJ has called for a complete review of the
civil service, bureaucratic structure, and the independent administrative
agencies owned by the government," says Usui. "The aim is one of
privatizing, nationalizing, eliminating, or transferring some or all of
their operations."

Its also advocates what it calls "regional sovereignty" to increase the
amount of funds under local government control by replacing earmarked
subsidies from the central government with lump-sum grants for regions to
use as they see fit. 

Moody's expects that the new government will submit by end-2009 a new,
comprehensive bill on decentralization, based on three recommendations
put forward by a committee on the subject.

The first recommendation deals with the basic responsibilities of future
municipalities; the second with reallocating administrative
responsibilities between the central government and regional local
governments; and the third with rebuilding the financial systems linking
the central government and regions over the next 10 years.

Accordingly, Moody's will monitor the potential impact of developments on
these fronts in our credit assessments of the regional government issuers.

For a fuller report, please refer to Page 6 of the August 31 edition of
Moody's Weekly Credit Outlook and refer to the article entitled: DPJ
Platform Hints at How Its Victory Might Impact Japanese Issuers.