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.