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Moody's Investors Service Inc.

Moody's Assigns Provisional Rating to Nomura's Additional Tier 1 Securities

Strategic Insights

— 2 min read

Moody's Ratings has issued a provisional rating to Nomura Holdings, Inc.'s proposed USD-denominated, perpetual, non-cumulative and subordinated Additional Tier 1 (AT1) securities, which will be issued from Nomura's USD shelf registration program. The terms and conditions of the notes incorporate Basel III-compliant non-viability language in accordance with Japanese regulations and will qualify as regulatory AT1 capital securities. The provisional rating represents Moody's preliminary credit opinion on the proposed notes, which may differ from the final rating upon completion of the issuance.

The (P)Ba3(hyb) rating is positioned three notches below the Baa3 standalone assessment of Nomura's main operating subsidiary, Nomura Securities Co., Ltd. (Nomura Securities), reflecting Moody's group-consolidated view of Nomura. The rating also takes into account the absence of government support, as well as subordination and coupon skip features.

Key Takeaways:

  • Moody's has assigned a provisional (P)Ba3(hyb) rating to Nomura's proposed USD-denominated, perpetual, non-cumulative and subordinated Additional Tier 1 (AT1) securities.
  • The (P)Ba3(hyb) rating is positioned three notches below the Baa3 standalone assessment of Nomura Securities, reflecting Moody's group-consolidated view of Nomura.
  • The rating also considers the absence of government support, subordination, and coupon skip features.
  • The principal and accrued but unpaid distributions on these capital securities would be written down if Nomura's consolidated Common Equity Tier 1 (CET1) ratio falls below 5.125%.
  • Nomura, as a going concern, may choose not to pay interest on these securities on a non-cumulative basis.
  • These securities are senior to common shareholders but junior to all general creditors, senior debt, and subordinated debt holders.
  • Moody's could upgrade Nomura's AT1 securities rating if Nomura securities' standalone assessment is upgraded.
  • A downgrade of Nomura's standalone assessment is likely if the group's CET1 ratio declines to below 11% or its liquidity or funding structure deteriorates.

Statistics:

  • Total consolidated assets of Nomura as of March 31, 2025: JPY56.8 trillion.
  • Basel III-compliant non-viability language incorporated into the terms and conditions of the notes.
  • Nomura Securities reported pretax earnings volatility of 19.5% in 2024.
  • Nomura's return on average assets (ROAA) was 0.57% in 2024.
  • Moody's Rating Methodology: Securities Industry Market Makers (Japanese), published in June 2024.

Sources:

  • Moody's Ratings: Provisional rating to Nomura's Additional Tier 1 Securities
  • Nomura Holdings, Inc.: Annual Report 2025 (total consolidated assets of JPY56.8 trillion)
  • Moody's Ratings Methodology: Securities Industry Market Makers (Japanese), published in June 2024

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