Bulletin: Japan-Based Aeon's Subordinated Loan Assessed As Having Intermediate Equity Content

TOKYO (S&P Global Ratings) March 22, 2023--S&P Global Ratings today said it will classify Aeon Co. Ltd.'s (BBB/Negative/--) proposed subordinated loan as having intermediate equity content. We will regard 50% of the total amount as equity and the remaining 50% as debt. The loan would have no impact on our issuer credit rating on the Japan-based retailer. Aeon today said it will use the proceeds to refinance all ¥60 billion in subordinated loans it borrowed in March 2013. Upon execution of the planned subordinated loan on March 29, 2023, Aeon will prepay existing subordinated loans. It has cancelled plans to refinance the loans with an issuance of subordinated bonds. The characteristics of the subordinated loan--the borrower's option to defer interest

...March 22, 2023 TOKYO (S&P Global Ratings) March 22, 2023--S&P Global Ratings today said it will classify Aeon Co. Ltd.'s (###/Negative/--) proposed subordinated loan as having intermediate equity content. We will regard 50% of the total amount as equity and the remaining 50% as debt. The loan would have no impact on our issuer credit rating on the Japan-based retailer. Aeon today said it will use the proceeds to refinance all Ñ60 billion in subordinated loans it borrowed in March 2013. Upon execution of the planned subordinated loan on March 29, 2023, Aeon will prepay existing subordinated loans. It has cancelled plans to refinance the loans with an issuance of subordinated bonds. The characteristics of the subordinated loan--the borrower's option to defer interest payments, a sufficiently long residual time, and subordination in liquidation or bankruptcy proceedings--meet our standards for deeming it to have intermediate equity content. The loan is due in 2053. We believe Aeon has an incentive...

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