Mitsubishi Estate#s Proposed Green Bonds Rated #A+#

Stocks and Financial Services Press Releases Wednesday June 20, 2018 16:18
TOKYO--20 Jun--S&P Global Ratings

TOKYO (S&P Global Ratings) June 20, 2018--S&P Global Ratings today said it has assigned its 'A+' long-term issue credit rating to Japan-based real estate company Mitsubishi Estate Co. Ltd.'s (A+/Stable/A-1) proposed green bonds. We assign the same issue rating to the bonds as our long-term issuer credit rating on the company in consideration of two factors: our current rating category for the company; and its extremely low proportion of secured debt, which has higher priority in payment than the green bonds, to total assets before depreciation and amortization.

The bond issuance accords with Green Bond Principles--guidelines established by the International Capital Market Association's administrative bureau, the Green Bond Principles And Social Bond Principles Executive Committee. The company will use the proceeds of the issuance to fund construction of Tower A of its Tokyo Tokiwabashi Project, a redevelopment project in the Tokiwabashi district adjacent to Tokyo Station. We believe this issuance will improve the company's financial flexibility through diversification of its investor base.

Our ratings on Mitsubishi Estate reflect its established strong position in Japan's real estate market as the nation's second-largest diversified real estate company and its high recognition in the industry. The rating also reflects the company's strong ability to generate profits, backed by a high-quality leasing portfolio consisting mainly of properties located in Marunouchi, Tokyo's prime business district. Although the company maintains strong interest coverage ratios under its relatively conservative financial management, measures of cash flow are likely to remain somewhat weak for the ratings because the company's aggressive investments are likely to boost its debt in the next two to three years, in our opinion. Our view incorporates our consideration of environmental, social, and governance risks and opportunities.


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