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Moody's Investors Service Inc.

Moody's Assigns Aaa Ratings to National Securities Clearing Corporation's Senior Unsecured Notes

Strategic Insights

— 1 min read

Moody's Ratings has assigned Aaa ratings to National Securities Clearing Corporation's (NSCC) offering of senior unsecured notes totaling $1.75 billion. The rating reflects the strong structural protections in place concerning the safe investment of issuance proceeds, their exclusive use as part of NSCC's liquidity risk management framework, and the replenishment of used funds through a loss waterfall. The outlook for NSCC remains unchanged at negative, reflecting the potential weakening of the US government's ability to support NSCC in case of financial distress.

Key Takeaways:

  • NSCC will use the net proceeds to refinance approximately $1.1 billion in maturing debt and will have around $3-$5 billion outstanding in fixed- or floating-rate term senior unsecured debt at any time.
  • The Aaa rating on NSCC's proposed senior unsecured notes is aligned with the Aaa rating on NSCC's existing senior unsecured notes and NSCC's Aaa clearing counterparty rating (CCR).
  • The rating incorporates one notch of government support, reflecting the very high likelihood that the US government would intend to support NSCC in case of financial distress.
  • The assessments of NSCC's standalone credit strength could be lowered if stress testing and back-testing reveal a possible sustained deterioration in risk management and monitoring.
  • NSCC's senior unsecured notes are rated Aaa because of the strong structural protections in place concerning the safe investment of issuance proceeds, their exclusive use as part of NSCC's liquidity risk management framework, and the replenishment of used funds through a loss waterfall.

Statistics:

  • $1.75 billion: Total amount of senior unsecured notes issued by NSCC.
  • $750 million: Amount of fixed-rate notes maturing in May 2027.
  • $400 million: Amount of floating-rate notes due in May 2027.
  • $600 million: Amount of fixed-rate notes maturing in May 2030.
  • $1.1 billion: Approximate amount of maturing debt to be refinanced by NSCC.
  • $3-$5 billion: Approximate amount of NSCC's outstanding senior unsecured debt at any time.
  • $4.3 billion: Approximate amount of NSCC's senior unsecured notes outstanding after this issuance and refinancing.

Sources:

  • Moody's Ratings, "Rating Issuer: National Securities Clearing Corporation."
  • Moody's Ratings, "RATINGS RATIONALE."

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