- Asian Market Value Stock Picks Featuring Three Companies Estimably Trading Below Fair Value
Oct 15, 2025
Amidst the backdrop of renewed U.S.-China trade tensions and mixed performance in global markets, Asian equities present intriguing opportunities for value investors. In this environment of uncertainty, identifying stocks that are potentially trading below their fair value can offer a strategic advantage, as they may provide resilience against broader market volatility.
Top 10 Undervalued Stocks Based On Cash Flows In Asia
Name Current Price Fair Value (Est) Discount (Est) Zhejiang Century Huatong GroupLtd (SZSE:002602) CN¥19.15 CN¥38.16 49.8% TaewoongLtd (KOSDAQ:A044490) ₩35600.00 ₩69644.59 48.9% Suzhou Hengmingda Electronic Technology (SZSE:002947) CN¥44.65 CN¥89.14 49.9% Sheng Siong Group (SGX:OV8) SGD2.15 SGD4.28 49.8% Japan Data Science ConsortiumLtd (TSE:4418) ¥959.00 ¥1910.64 49.8% Insource (TSE:6200) ¥927.00 ¥1803.64 48.6% Genesem (KOSDAQ:A217190) ₩9730.00 ₩19382.18 49.8% Essex Bio-Technology (SEHK:1061) HK$4.77 HK$9.46 49.6% DuChemBIOLtd (KOSDAQ:A176750) ₩9180.00 ₩17999.49 49% Beijing LongRuan Technologies (SHSE:688078) CN¥30.29 CN¥59.73 49.3%
Click here to see the full list of 275 stocks from our Undervalued Asian Stocks Based On Cash Flows screener.
Below we spotlight a couple of our favorites from our exclusive screener.
China Resources Mixc Lifestyle Services
Overview: China Resources Mixc Lifestyle Services Limited is an investment holding company providing property management and commercial operational services in the People’s Republic of China, with a market cap of HK$92.08 billion.
Operations: The company's revenue segments include the ecosystem business generating CN¥104.49 million, property management business contributing CN¥10.77 billion, and commercial management business bringing in CN¥6.69 billion.
Estimated Discount To Fair Value: 14.2%
China Resources Mixc Lifestyle Services appears undervalued, trading at HK$40.34, below its fair value estimate of HK$47.01. Despite a dividend yield of 4.12% not fully covered by free cash flows, earnings and revenue growth are expected to outpace the Hong Kong market at 12.7% and 10.1% annually, respectively. Recent leadership changes include Mr. Zhao Wei's appointment as a non-executive director amidst stable financial performance with increased interim dividends declared for 2025.
In light of our recent growth report, it seems possible that China Resources Mixc Lifestyle Services' financial performance will exceed current levels. Click here and access our complete balance sheet health report to understand the dynamics of China Resources Mixc Lifestyle Services.SEHK:1209 Discounted Cash Flow as at Oct 2025
Tongguan Gold Group
Overview: Tongguan Gold Group Limited is an investment holding company involved in the exploration, mining, processing, smelting, and sale of gold and related products in China with a market cap of HK$14.12 billion.
Story Continues
Operations: The company's revenue primarily comes from its gold mining operations, which generated HK$1.69 billion.
Estimated Discount To Fair Value: 41.4%
Tongguan Gold Group is trading at HK$3.21, significantly below its estimated fair value of HK$5.48, indicating potential undervaluation based on cash flows. The company reported strong financial performance for the first half of 2025, with net income rising to HK$342.64 million from HK$91.96 million a year earlier, driven by increased gold production and sales volumes. Recent inclusion in the S&P Global BMI Index and leadership changes with Mr. Wang Dequan as CEO may influence future prospects positively.
The analysis detailed in our Tongguan Gold Group growth report hints at robust future financial performance. Dive into the specifics of Tongguan Gold Group here with our thorough financial health report.SEHK:340 Discounted Cash Flow as at Oct 2025
Anhui Jinhe IndustrialLtd
Overview: Anhui Jinhe Industrial Co., Ltd. is involved in the R&D, production, and sales of food additives, daily chemical flavors, bulk chemicals, and intermediates with a market cap of CN¥11.58 billion.
Operations: The company's revenue is derived from Trade (CN¥11.80 billion), Food Manufacturing (CN¥2.59 billion), and the Basic Chemical Industry (CN¥2.16 billion).
Estimated Discount To Fair Value: 35.4%
Anhui Jinhe Industrial Ltd. is trading at CN¥21.17, well below its estimated fair value of CN¥32.79, highlighting potential undervaluation based on cash flows. Despite a slight decline in revenue to CN¥2.44 billion for the first half of 2025, net income increased to CN¥334.24 million from the previous year due to improved earnings per share and operational efficiencies. Recent amendments to its articles of association may impact governance and strategic direction moving forward.
Our growth report here indicates Anhui Jinhe IndustrialLtd may be poised for an improving outlook. Take a closer look at Anhui Jinhe IndustrialLtd's balance sheet health here in our report.SZSE:002597 Discounted Cash Flow as at Oct 2025
Summing It All Up
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include SEHK:1209 SEHK:340 and SZSE:002597.
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- Clear Channel International B.V. -- Moody's affirms Clear Channel's B3 CFR and assigns Caa2 rating to new senior note; outlook negative
Feb 1, 2021
Rating Action: Moody's affirms Clear Channel's B3 CFR and assigns Caa2 rating to new senior note; outlook negativeGlobal Credit Research - 01 Feb 2021New York, February 01, 2021 -- Moody's Investors Service, ("Moody's") affirmed Clear Channel Outdoor Holdings, Inc's (Clear Channel) B3 Corporate Family Rating (CFR) and assigned a Caa2 rating to the proposed $1 billion senior unsecured note. Clear Channel's existing senior secured credit facility and senior secured notes were affirmed at B1 while the existing senior unsecured notes issued by affiliate, Clear Channel Worldwide Holdings, Inc (CCW), were affirmed at Caa2. The outlook remains negative.The net proceeds of the $1 billion senior unsecured note due 2028 will be used to repay $940 million of the existing senior unsecured notes issued at subsidiary, CCW. The transaction increases outstanding debt slightly, but extends a portion of its debt maturity schedule. Overall interest expense is likely to be largely unchanged.Despite elevated leverage levels and negative free cash flow, liquidity is projected to be adequate over the next year as a result of Clear Channel's large cash balance and the Speculative Grade Liquidity (SGL) rating remains unchanged at SGL-3.Assignments:..Issuer: Clear Channel Outdoor Holdings, Inc.....Gtd Senior Unsecured Regular Bond/Debenture, Assigned Caa2 (LGD5)Outlook Actions:..Issuer: Clear Channel International B.V.....Outlook, Remains Negative..Issuer: Clear Channel Outdoor Holdings, Inc.....Outlook, Remains Negative..Issuer: Clear Channel Worldwide Holdings, Inc.....Outlook, Remains NegativeAffirmations:..Issuer: Clear Channel International B.V.....Senior Secured Regular Bond/Debenture, Affirmed B2 (LGD3)..Issuer: Clear Channel Outdoor Holdings, Inc..... Probability of Default Rating, Affirmed B3-PD.... Corporate Family Rating, Affirmed B3....Senior Secured Bank Credit Facility, Affirmed B1 (LGD3)....Senior Secured Regular Bond/Debenture, Affirmed B1 (LGD3)..Issuer: Clear Channel Worldwide Holdings, Inc.....Senior Unsecured Regular Bond/Debenture, Affirmed Caa2 (LGD5)RATINGS RATIONALEClear Channel's B3 CFR reflects the ongoing impact of the coronavirus pandemic on the global economy and outdoor advertising spending which has led to extremely high leverage (over 30x as of Q3 2020 excluding Moody's standard lease adjustment) and decreased operating cash flow. Moody's expects leverage will continue to increase and operating cash flow will decrease through Q1 2021, before beginning to improve in Q2 2021. Recent expense and capex reductions are projected to offset only a portion of the declines in profitability and cash flow arising from the pandemic and economic recession.While Clear Channel has diversified operations primarily in the U.S. and Europe, there is significant exposure to larger markets which have been more adversely impacted by the coronavirus and elevated declines in operating performance in both divisions. The outdoor advertising industry also remains vulnerable to reduced consumer ad spending, with contract terms generally shorter than in prior periods. As result, we expect the outdoor industry will be affected more rapidly than in prior recessions, although performance should improve quicker than in previous recoveries due to the lower commitment level and ease of initiating new outdoor campaigns.Clear Channel benefits from its market position as one of the largest outdoor advertising companies in the world with diversified international operations. The ability to convert traditional static billboards to digital provides growth opportunities which Moody's expects will lead to higher revenue and EBITDA with appeal to a broader range of advertisers after the pandemic subsides. Outdoor advertising is not likely to suffer from disintermediation as other traditional media outlets have and will benefit from restrictions of the supply of additional billboards (particularly in the US), which helps support advertising rates and very high asset valuations.The coronavirus outbreak, the government measures put in place to contain it, and the weak global economic outlook continue to disrupt economies and credit markets across sectors and regions. Moody's analysis has considered the effect on the performance of outdoor advertising revenue from the current weak economic activity and a gradual recovery for the coming months. Although an economic recovery is underway, it is tenuous and its continuation will be closely tied to containment of the virus. As a result, the degree of uncertainty around our forecasts is unusually high. Moody's regards the coronavirus outbreak as a social risk under our ESG framework, given the substantial implications for public health and safety.A governance impact that Moody's considers in Clear Channel's credit profile is the change in financial policy. Prior to the separation with iHeartCommunications, Inc. (iHeart) in Q2 2019, Clear Channel paid material dividends to its prior parent company that led to reduced free cash flow and high leverage levels. Moody's expects that Clear Channel will pursue a more conservative policy after the pandemic abates, but will remain focused on preserving liquidity in the near term.The SGL-3 rating reflects Moody's expectation that Clear Channel will maintain adequate liquidity in the near term. Cash on the balance sheet was $845 million at the end of Q3 2020 following the $375 million senior secured notes issued in August 2020 through indirect wholly-owned subsidiary, Clear Channel International B.V. (CCIBV). Clear Channel had $130 million drawn on the $175 million revolver due 2024 ($20mm of L/Cs outstanding) as of Q3 2020 pro forma for the $20 million revolver repayment in October 2020. Liquidity also benefited from the sale of its position in Clear Media for $216 million in net proceeds in Q2 2020.Free cash flow (FCF) was slightly negative in prior years and negative $205 million YTD Q3 2020. Moody's expects FCF will continue to be negative despite efforts to cut capex to the $125 million range in 2020 from $221 million in 2019. FCF is projected to improve in Q2 2021, but will remain negative in 2021 and 2022. Additional sales of non-core assets are possible going forward, especially outside of North America, which could provide Clear Channel with an additional source of liquidity.The term loan is covenant lite and the revolver is subject to a first lien net leverage ratio of 7.6x if the balance of the revolver is greater than $0 and undrawn letters of credit exceed $10 million. If the total leverage ratio is equal to or less than 6.5x, the revolver will only be subject to the first lien net leverage ratio when greater than 35% is drawn. In June 2020, Clear Channel amended the Senior Secured Credit Agreement to suspend the springing financial covenant of the Revolving Credit Facility from the third quarter of 2020 through the second quarter of 2021. During the suspension period, Clear Channel is subject to a minimum liquidity test of $150 million. Moody's expects Clear Channel will need an amendment to the revolver covenant prior to the expiration of the suspension period to maintain full access to the revolver.The negative outlook reflects Moody's expectation of continuing declines in revenue and EBITDA as a result of the pandemic through Q1 2021, before improving in Q2 2020 as trough quarters from 2020 begin to roll off. Profitability at the European business that has a higher percentage of lower margin street furniture and transit revenue located in large markets, has been especially hard hit, but performance will begin to improve in Q2 2021. Moody's expects Clear Channel will have adequate liquidity over the next year, although the company will be reliant on its cash balance for liquidity as FCF is projected to remain negative through 2022. Moody's expects leverage levels will improve to the 14x range by the end of 2021 and to under 11x by the end of 2022 as advertising spend improves after the impact of the pandemic subsides.FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGSA rating upgrade is not expected in the near term for Clear Channel due to the impact of the pandemic and extremely high leverage levels. However, an upgrade could occur if leverage decreased below 7x with a positive free cash flow to debt ratio in the mid-single digits and an EBITDA minus capex to interest coverage ratio of over 1.5x. An adequate liquidity profile with a sufficient cushion of compliance with financial covenants would also be required.The ratings could be downgraded if leverage exceeds 10x for an extended period of time once the pandemic subsides or if the liquidity position deteriorated such that there was an increased possibility of default or a distressed exchange. An EBITDA minus capex to interest coverage ratio sustained below 1x or inability to obtain an amendment on its financial covenant applicable to its revolver if needed in the future would also lead to a downgrade.Clear Channel Outdoor Holdings, Inc. (CCO), headquartered in San Antonio, Texas, is a leading global outdoor advertising company that generates LTM revenues of about $2.1 billion as of Q3 2020. iHeartCommunications, Inc. (iHeart) previously owned 89% of CCO and former iHeart debtholders obtained a substantial portion of CCO's equity following iHeart's exit from bankruptcy in Q2 2019.The principal methodology used in these ratings was Media Industry published in June 2017 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1077538. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.REGULATORY DISCLOSURESFor further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.These ratings are solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1243406.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the UK and is endorsed by Moody's Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating. Scott Van den Bosch VP - Senior Credit Officer Corporate Finance Group Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. 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- Clear Channel International B.V. -- Moody's affirms Clear Channel's B3 CFR and assigns Caa2 rating to new senior note; outlook negative
Feb 1, 2021
Rating Action: Moody's affirms Clear Channel's B3 CFR and assigns Caa2 rating to new senior note; outlook negativeGlobal Credit Research - 01 Feb 2021New York, February 01, 2021 -- Moody's Investors Service, ("Moody's") affirmed Clear Channel Outdoor Holdings, Inc's (Clear Channel) B3 Corporate Family Rating (CFR) and assigned a Caa2 rating to the proposed $1 billion senior unsecured note. Clear Channel's existing senior secured credit facility and senior secured notes were affirmed at B1 while the existing senior unsecured notes issued by affiliate, Clear Channel Worldwide Holdings, Inc (CCW), were affirmed at Caa2. The outlook remains negative.The net proceeds of the $1 billion senior unsecured note due 2028 will be used to repay $940 million of the existing senior unsecured notes issued at subsidiary, CCW. The transaction increases outstanding debt slightly, but extends a portion of its debt maturity schedule. Overall interest expense is likely to be largely unchanged.Despite elevated leverage levels and negative free cash flow, liquidity is projected to be adequate over the next year as a result of Clear Channel's large cash balance and the Speculative Grade Liquidity (SGL) rating remains unchanged at SGL-3.Assignments:..Issuer: Clear Channel Outdoor Holdings, Inc.....Gtd Senior Unsecured Regular Bond/Debenture, Assigned Caa2 (LGD5)Outlook Actions:..Issuer: Clear Channel International B.V.....Outlook, Remains Negative..Issuer: Clear Channel Outdoor Holdings, Inc.....Outlook, Remains Negative..Issuer: Clear Channel Worldwide Holdings, Inc.....Outlook, Remains NegativeAffirmations:..Issuer: Clear Channel International B.V.....Senior Secured Regular Bond/Debenture, Affirmed B2 (LGD3)..Issuer: Clear Channel Outdoor Holdings, Inc..... Probability of Default Rating, Affirmed B3-PD.... Corporate Family Rating, Affirmed B3....Senior Secured Bank Credit Facility, Affirmed B1 (LGD3)....Senior Secured Regular Bond/Debenture, Affirmed B1 (LGD3)..Issuer: Clear Channel Worldwide Holdings, Inc.....Senior Unsecured Regular Bond/Debenture, Affirmed Caa2 (LGD5)RATINGS RATIONALEClear Channel's B3 CFR reflects the ongoing impact of the coronavirus pandemic on the global economy and outdoor advertising spending which has led to extremely high leverage (over 30x as of Q3 2020 excluding Moody's standard lease adjustment) and decreased operating cash flow. Moody's expects leverage will continue to increase and operating cash flow will decrease through Q1 2021, before beginning to improve in Q2 2021. Recent expense and capex reductions are projected to offset only a portion of the declines in profitability and cash flow arising from the pandemic and economic recession.While Clear Channel has diversified operations primarily in the U.S. and Europe, there is significant exposure to larger markets which have been more adversely impacted by the coronavirus and elevated declines in operating performance in both divisions. The outdoor advertising industry also remains vulnerable to reduced consumer ad spending, with contract terms generally shorter than in prior periods. As result, we expect the outdoor industry will be affected more rapidly than in prior recessions, although performance should improve quicker than in previous recoveries due to the lower commitment level and ease of initiating new outdoor campaigns.Clear Channel benefits from its market position as one of the largest outdoor advertising companies in the world with diversified international operations. The ability to convert traditional static billboards to digital provides growth opportunities which Moody's expects will lead to higher revenue and EBITDA with appeal to a broader range of advertisers after the pandemic subsides. Outdoor advertising is not likely to suffer from disintermediation as other traditional media outlets have and will benefit from restrictions of the supply of additional billboards (particularly in the US), which helps support advertising rates and very high asset valuations.The coronavirus outbreak, the government measures put in place to contain it, and the weak global economic outlook continue to disrupt economies and credit markets across sectors and regions. Moody's analysis has considered the effect on the performance of outdoor advertising revenue from the current weak economic activity and a gradual recovery for the coming months. Although an economic recovery is underway, it is tenuous and its continuation will be closely tied to containment of the virus. As a result, the degree of uncertainty around our forecasts is unusually high. Moody's regards the coronavirus outbreak as a social risk under our ESG framework, given the substantial implications for public health and safety.A governance impact that Moody's considers in Clear Channel's credit profile is the change in financial policy. Prior to the separation with iHeartCommunications, Inc. (iHeart) in Q2 2019, Clear Channel paid material dividends to its prior parent company that led to reduced free cash flow and high leverage levels. Moody's expects that Clear Channel will pursue a more conservative policy after the pandemic abates, but will remain focused on preserving liquidity in the near term.The SGL-3 rating reflects Moody's expectation that Clear Channel will maintain adequate liquidity in the near term. Cash on the balance sheet was $845 million at the end of Q3 2020 following the $375 million senior secured notes issued in August 2020 through indirect wholly-owned subsidiary, Clear Channel International B.V. (CCIBV). Clear Channel had $130 million drawn on the $175 million revolver due 2024 ($20mm of L/Cs outstanding) as of Q3 2020 pro forma for the $20 million revolver repayment in October 2020. Liquidity also benefited from the sale of its position in Clear Media for $216 million in net proceeds in Q2 2020.Free cash flow (FCF) was slightly negative in prior years and negative $205 million YTD Q3 2020. Moody's expects FCF will continue to be negative despite efforts to cut capex to the $125 million range in 2020 from $221 million in 2019. FCF is projected to improve in Q2 2021, but will remain negative in 2021 and 2022. Additional sales of non-core assets are possible going forward, especially outside of North America, which could provide Clear Channel with an additional source of liquidity.The term loan is covenant lite and the revolver is subject to a first lien net leverage ratio of 7.6x if the balance of the revolver is greater than $0 and undrawn letters of credit exceed $10 million. If the total leverage ratio is equal to or less than 6.5x, the revolver will only be subject to the first lien net leverage ratio when greater than 35% is drawn. In June 2020, Clear Channel amended the Senior Secured Credit Agreement to suspend the springing financial covenant of the Revolving Credit Facility from the third quarter of 2020 through the second quarter of 2021. During the suspension period, Clear Channel is subject to a minimum liquidity test of $150 million. Moody's expects Clear Channel will need an amendment to the revolver covenant prior to the expiration of the suspension period to maintain full access to the revolver.The negative outlook reflects Moody's expectation of continuing declines in revenue and EBITDA as a result of the pandemic through Q1 2021, before improving in Q2 2020 as trough quarters from 2020 begin to roll off. Profitability at the European business that has a higher percentage of lower margin street furniture and transit revenue located in large markets, has been especially hard hit, but performance will begin to improve in Q2 2021. Moody's expects Clear Channel will have adequate liquidity over the next year, although the company will be reliant on its cash balance for liquidity as FCF is projected to remain negative through 2022. Moody's expects leverage levels will improve to the 14x range by the end of 2021 and to under 11x by the end of 2022 as advertising spend improves after the impact of the pandemic subsides.FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGSA rating upgrade is not expected in the near term for Clear Channel due to the impact of the pandemic and extremely high leverage levels. However, an upgrade could occur if leverage decreased below 7x with a positive free cash flow to debt ratio in the mid-single digits and an EBITDA minus capex to interest coverage ratio of over 1.5x. An adequate liquidity profile with a sufficient cushion of compliance with financial covenants would also be required.The ratings could be downgraded if leverage exceeds 10x for an extended period of time once the pandemic subsides or if the liquidity position deteriorated such that there was an increased possibility of default or a distressed exchange. An EBITDA minus capex to interest coverage ratio sustained below 1x or inability to obtain an amendment on its financial covenant applicable to its revolver if needed in the future would also lead to a downgrade.Clear Channel Outdoor Holdings, Inc. (CCO), headquartered in San Antonio, Texas, is a leading global outdoor advertising company that generates LTM revenues of about $2.1 billion as of Q3 2020. iHeartCommunications, Inc. (iHeart) previously owned 89% of CCO and former iHeart debtholders obtained a substantial portion of CCO's equity following iHeart's exit from bankruptcy in Q2 2019.The principal methodology used in these ratings was Media Industry published in June 2017 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1077538. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.REGULATORY DISCLOSURESFor further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.These ratings are solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1243406.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the UK and is endorsed by Moody's Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating. Scott Van den Bosch VP - Senior Credit Officer Corporate Finance Group Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. 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- Clear Channel International B.V. -- Moody's affirms Clear Channel's B3 CFR and assigns Caa2 rating to new senior note; outlook negative
Feb 1, 2021
Rating Action: Moody's affirms Clear Channel's B3 CFR and assigns Caa2 rating to new senior note; outlook negativeGlobal Credit Research - 01 Feb 2021New York, February 01, 2021 -- Moody's Investors Service, ("Moody's") affirmed Clear Channel Outdoor Holdings, Inc's (Clear Channel) B3 Corporate Family Rating (CFR) and assigned a Caa2 rating to the proposed $1 billion senior unsecured note. Clear Channel's existing senior secured credit facility and senior secured notes were affirmed at B1 while the existing senior unsecured notes issued by affiliate, Clear Channel Worldwide Holdings, Inc (CCW), were affirmed at Caa2. The outlook remains negative.The net proceeds of the $1 billion senior unsecured note due 2028 will be used to repay $940 million of the existing senior unsecured notes issued at subsidiary, CCW. The transaction increases outstanding debt slightly, but extends a portion of its debt maturity schedule. Overall interest expense is likely to be largely unchanged.Despite elevated leverage levels and negative free cash flow, liquidity is projected to be adequate over the next year as a result of Clear Channel's large cash balance and the Speculative Grade Liquidity (SGL) rating remains unchanged at SGL-3.Assignments:..Issuer: Clear Channel Outdoor Holdings, Inc.....Gtd Senior Unsecured Regular Bond/Debenture, Assigned Caa2 (LGD5)Outlook Actions:..Issuer: Clear Channel International B.V.....Outlook, Remains Negative..Issuer: Clear Channel Outdoor Holdings, Inc.....Outlook, Remains Negative..Issuer: Clear Channel Worldwide Holdings, Inc.....Outlook, Remains NegativeAffirmations:..Issuer: Clear Channel International B.V.....Senior Secured Regular Bond/Debenture, Affirmed B2 (LGD3)..Issuer: Clear Channel Outdoor Holdings, Inc..... Probability of Default Rating, Affirmed B3-PD.... Corporate Family Rating, Affirmed B3....Senior Secured Bank Credit Facility, Affirmed B1 (LGD3)....Senior Secured Regular Bond/Debenture, Affirmed B1 (LGD3)..Issuer: Clear Channel Worldwide Holdings, Inc.....Senior Unsecured Regular Bond/Debenture, Affirmed Caa2 (LGD5)RATINGS RATIONALEClear Channel's B3 CFR reflects the ongoing impact of the coronavirus pandemic on the global economy and outdoor advertising spending which has led to extremely high leverage (over 30x as of Q3 2020 excluding Moody's standard lease adjustment) and decreased operating cash flow. Moody's expects leverage will continue to increase and operating cash flow will decrease through Q1 2021, before beginning to improve in Q2 2021. Recent expense and capex reductions are projected to offset only a portion of the declines in profitability and cash flow arising from the pandemic and economic recession.While Clear Channel has diversified operations primarily in the U.S. and Europe, there is significant exposure to larger markets which have been more adversely impacted by the coronavirus and elevated declines in operating performance in both divisions. The outdoor advertising industry also remains vulnerable to reduced consumer ad spending, with contract terms generally shorter than in prior periods. As result, we expect the outdoor industry will be affected more rapidly than in prior recessions, although performance should improve quicker than in previous recoveries due to the lower commitment level and ease of initiating new outdoor campaigns.Clear Channel benefits from its market position as one of the largest outdoor advertising companies in the world with diversified international operations. The ability to convert traditional static billboards to digital provides growth opportunities which Moody's expects will lead to higher revenue and EBITDA with appeal to a broader range of advertisers after the pandemic subsides. Outdoor advertising is not likely to suffer from disintermediation as other traditional media outlets have and will benefit from restrictions of the supply of additional billboards (particularly in the US), which helps support advertising rates and very high asset valuations.The coronavirus outbreak, the government measures put in place to contain it, and the weak global economic outlook continue to disrupt economies and credit markets across sectors and regions. Moody's analysis has considered the effect on the performance of outdoor advertising revenue from the current weak economic activity and a gradual recovery for the coming months. Although an economic recovery is underway, it is tenuous and its continuation will be closely tied to containment of the virus. As a result, the degree of uncertainty around our forecasts is unusually high. Moody's regards the coronavirus outbreak as a social risk under our ESG framework, given the substantial implications for public health and safety.A governance impact that Moody's considers in Clear Channel's credit profile is the change in financial policy. Prior to the separation with iHeartCommunications, Inc. (iHeart) in Q2 2019, Clear Channel paid material dividends to its prior parent company that led to reduced free cash flow and high leverage levels. Moody's expects that Clear Channel will pursue a more conservative policy after the pandemic abates, but will remain focused on preserving liquidity in the near term.The SGL-3 rating reflects Moody's expectation that Clear Channel will maintain adequate liquidity in the near term. Cash on the balance sheet was $845 million at the end of Q3 2020 following the $375 million senior secured notes issued in August 2020 through indirect wholly-owned subsidiary, Clear Channel International B.V. (CCIBV). Clear Channel had $130 million drawn on the $175 million revolver due 2024 ($20mm of L/Cs outstanding) as of Q3 2020 pro forma for the $20 million revolver repayment in October 2020. Liquidity also benefited from the sale of its position in Clear Media for $216 million in net proceeds in Q2 2020.Free cash flow (FCF) was slightly negative in prior years and negative $205 million YTD Q3 2020. Moody's expects FCF will continue to be negative despite efforts to cut capex to the $125 million range in 2020 from $221 million in 2019. FCF is projected to improve in Q2 2021, but will remain negative in 2021 and 2022. Additional sales of non-core assets are possible going forward, especially outside of North America, which could provide Clear Channel with an additional source of liquidity.The term loan is covenant lite and the revolver is subject to a first lien net leverage ratio of 7.6x if the balance of the revolver is greater than $0 and undrawn letters of credit exceed $10 million. If the total leverage ratio is equal to or less than 6.5x, the revolver will only be subject to the first lien net leverage ratio when greater than 35% is drawn. In June 2020, Clear Channel amended the Senior Secured Credit Agreement to suspend the springing financial covenant of the Revolving Credit Facility from the third quarter of 2020 through the second quarter of 2021. During the suspension period, Clear Channel is subject to a minimum liquidity test of $150 million. Moody's expects Clear Channel will need an amendment to the revolver covenant prior to the expiration of the suspension period to maintain full access to the revolver.The negative outlook reflects Moody's expectation of continuing declines in revenue and EBITDA as a result of the pandemic through Q1 2021, before improving in Q2 2020 as trough quarters from 2020 begin to roll off. Profitability at the European business that has a higher percentage of lower margin street furniture and transit revenue located in large markets, has been especially hard hit, but performance will begin to improve in Q2 2021. Moody's expects Clear Channel will have adequate liquidity over the next year, although the company will be reliant on its cash balance for liquidity as FCF is projected to remain negative through 2022. Moody's expects leverage levels will improve to the 14x range by the end of 2021 and to under 11x by the end of 2022 as advertising spend improves after the impact of the pandemic subsides.FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGSA rating upgrade is not expected in the near term for Clear Channel due to the impact of the pandemic and extremely high leverage levels. However, an upgrade could occur if leverage decreased below 7x with a positive free cash flow to debt ratio in the mid-single digits and an EBITDA minus capex to interest coverage ratio of over 1.5x. An adequate liquidity profile with a sufficient cushion of compliance with financial covenants would also be required.The ratings could be downgraded if leverage exceeds 10x for an extended period of time once the pandemic subsides or if the liquidity position deteriorated such that there was an increased possibility of default or a distressed exchange. An EBITDA minus capex to interest coverage ratio sustained below 1x or inability to obtain an amendment on its financial covenant applicable to its revolver if needed in the future would also lead to a downgrade.Clear Channel Outdoor Holdings, Inc. (CCO), headquartered in San Antonio, Texas, is a leading global outdoor advertising company that generates LTM revenues of about $2.1 billion as of Q3 2020. iHeartCommunications, Inc. (iHeart) previously owned 89% of CCO and former iHeart debtholders obtained a substantial portion of CCO's equity following iHeart's exit from bankruptcy in Q2 2019.The principal methodology used in these ratings was Media Industry published in June 2017 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1077538. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.REGULATORY DISCLOSURESFor further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.These ratings are solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1243406.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the UK and is endorsed by Moody's Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating. Scott Van den Bosch VP - Senior Credit Officer Corporate Finance Group Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Stephen Sohn Associate Managing Director Corporate Finance Group JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Releasing Office: Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 © 2021 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.CREDIT RATINGS ISSUED BY MOODY'S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE APPLICABLE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS (“ASSESSMENTS”), AND OTHER OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS, AND PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS OR PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing its Publications.To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING, ASSESSMENT, OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody’s Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $5,000,000. MCO and Moody’s Investors Service also maintain policies and procedures to address the independence of Moody’s Investors Service credit ratings and credit rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody’s Investors Service and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY550,000,000.MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.
