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S&P downgrades AEON Credit Service (Asia)

Standard & Poor's Ratings Services on April 13downgraded AEON Credit Service(Asia) Co. Ltd.'s long-term issuer credit ratings to BBB from BBB+,citing increased economic risk faced by parent AEON Financial Service due toits growing exposure to developing countries.

S&P also lowered the company's long- and short-termGreater China regional scale ratings to "cnA" and "cnA-2,"respectively, from "cnA+" and "cnA-1." The company's A-2short-term issuer credit rating was affirmed.

The outlook is stable.

AEON Financial Service's growing exposure to developingcountries with higher economic risks than its home market of Japan couldundermine the stability of the group's revenue over an economic cycle, S&Panalyst Chris Lee said. Such a development could affect AEON Credit Services(Asia) given its position as an important subsidiary to the parent and theinterrelation between their creditworthiness.

S&P, however, believes that AEON Financial Service'screditworthiness will remain manageable in the next 24 months even if economicrisk in Japan's banking sector rises.

The rating agency could downgrade AEON Credit Services(Asia) ratings if the creditworthiness of its parent diminishes due to itsweakening capitalization or deterioration in asset quality.

The ratings could be upgraded if the parent'screditworthiness improves of if it raises the ratings of AEON Co. Ltd., theparent of AEON Financial Service.

S&P Ratings andS&P Global Market Intelligence are owned by McGraw Hill Financial Inc.