The negative outlook reflects our view that we believe there is a more than a one-in-three chance that Aozora Bank's financial flexibility could weaken further for the next two years. We may consider downgrading Aozora Bank if any of the following cases emerge in the next one to two years: We come to believe the bank's financial soundness has deteriorated through, for example, weak asset quality, or its projected risk-adjusted capital (RAC) ratio falling and remaining below 7%; or We come to believe the bank's funding capacity has weakened because of factors such as unfavorable funding conditions. We will consider revising the bank's outlook to stable if its profit-generating capacity strengthens without capital adequacy relative to risk deteriorating. Our anchor
