Moody's cuts Promise, ACOM

Moody's Japan K.K. said it downgraded the long-term issuer and senior debt ratings of Promise Co., Ltd. to B1 from Ba1 and the long-term issuer and senior debt ratings of ACOM Co., Ltd. to Ba3 from Baa3.

The outlooks are negative.

This rating action concludes the review for possible downgrade initiated on Dec. 14, Moody's said.

The downgrade reflects growing concerns regarding the deterioration in the operating environment triggered by a bankruptcy of Takefuji Corp., the agency said. The Takefuji bankruptcy will undermine Promise and ACOM's current risk tolerance for rising overpaid-interest claims by the overlap in customers with Takefuji.

The downgrade also reflects reconsideration of support from Promise's parent bank Sumitomo Mitsui Banking Corp. and ACOM's parent Mitsubishi UFJ Financial Group as well as the concern that the persistent and severe operating environment will result in further deterioration in the companies' operating franchise and operating revenues/profits in the foreseeable future, the agency added.

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