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Published on 12/3/2020 in the Prospect News Investment Grade Daily.

Moody’s revises Mitsui Fudosan view to negative

Moody’s Investors Service said it revised the outlook for Mitsui Fudosan Co., Ltd. to negative from stable but affirmed its A2 issuer and senior unsecured ratings.

“The change in outlook to negative reflects Mitsui Fudosan’s rising leverage due to its debt-funded large-scale development projects, and the uncertainty over its ability to sustainably reverse the rising trend in financial leverage,” said Ryohei Nishio, a Moody’s analyst, in a press release.

Pressure is also building from Mitsui Fudosan’s risky appetite, as indicated by its planned acquisition of Tokyo Dome Corp. for more than ¥100 billion to undertake urban redevelopment. Mitsui Fudosan’s plan to expand its overseas operations also raises business risks. Also, the company’s investment property sales business, which has been growing in recent years,also brings inherent volatility due to its exposure to market conditions and lack of meaningful downside protection, the agency said.

“At the same time, the affirmation of Mitsui Fudosan’s A2 rating reflects its solid market position as Japan’s largest integrated real estate company with a diversified portfolio of prime properties, as well as the financial flexibility it enjoys from its cash holdings, committed credit facilities and largely unencumbered asset base,” added Nishio,” Nishio said.


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