Rating Definitions

National Scale Ratings

Moody’s assigns national scale ratings in certain local capital markets in which investors have found the global rating scale provides inadequate differentiation among credits or is inconsistent with a rating scale already in common use in the country.

Moody’s currently maintains national scale ratings for the following countries:

· Bolivia (.bo)

· Brazil (.br)

· Chile (.cl)

· Mexico (.mx)

· South Africa (.za)

· Taiwan (.tw)

· Uruguay (.uy)

Relative Rankings

Moody’s National Scale Ratings are opinions of the relative creditworthiness of issuers and issues within a particular country. While loss expectation will be an important differentiating factor in the ultimate rating assignment, it should be noted that loss expectation associated with National Scale Ratings can be expected to be significantly higher than apparently similar rating levels on Moody’s global scale.

Moody’s National Scale Ratings rank issuers and issues in order of relative creditworthiness: higher ratings are associated with lower expected credit loss.

Not Globally Comparable

National Scale Ratings can be understood as a relative ranking of creditworthiness (including relevant external support) within a particular country. National Scale Ratings are not designed to be compared among countries; rather, they address relative credit risk within a given country. Use of National Scale Ratings by investors is only appropriate within that portion of a portfolio that is exposed to a given country’s local market, taking into consideration the various risks implied by that country’s foreign and local currency ratings.

Rating Criteria

National Scale Ratings take into account the intrinsic financial strength of the obligor, including such traditional credit factors as management quality, market position and diversity, financial flexibility, transparency, the regulatory environment, and the issuer’s ability to meet its financial obligations through the course of normal local business cycles. Issuer segments subject to an abrupt decline in creditworthiness will generally be rated lower than segments less exposed. Certain external support factors may be taken into consideration, including instrument-specific guarantees and indentures, and parent company or government support (if any).

Treatment of Sovereign Risk

National Scale Ratings take into account all credit risks that bear on timely and full payment of a debt obligation, including sovereign related risks such as relative vulnerability to political developments, national monetary and fiscal policies, and, in rare cases, foreign currency convertibility and transfer risk.

Certain extreme events, such as a local currency payment system disruption, are largely extraneous to the analysis (at least as a differentiating factor) since all issuers would probably be equally affected by such a failure. In other extreme cases, such as a government rescheduling or moratorium on local or foreign currency debt obligations, issuers or issues with higher ratings should be relatively more insulated from such an event; nonetheless, in such a situation, even the highest-rated entities may be at risk of temporary default.

For this reason, the traditional concept of "investment grade" that is applied in the international markets cannot necessarily be applied even to the highest national ratings. Although national governments are often in a position to receive the highest national credit ratings, it cannot, in Moody’s view, be taken for granted that a country’s national government is necessarily the best credit on a domestic scale, since it is possible for a government to default on its local currency obligations while other issuers continue to perform.

National Scale Long-Term Rating Definitions

The rating definitions are as follows, with an "n" modifier signifying the relevant country, for example, Aaa.br for Brazil, or Aaa.tw for Taiwan.

Aaa.n

Issuers or issues rated Aaa.n demonstrate the strongest creditworthiness relative to other domestic issuers.

Aa.n

Issuers or issues rated Aa.n demonstrate very strong creditworthiness relative to other domestic issuers.

A.n

Issuers or issues rated A.n present above-average creditworthiness relative to other domestic issuers.

Baa.n

Issuers or issues rated Baa.n represent average creditworthiness relative to other domestic issuers.

Ba.n

Issuers or issues rated Ba.n demonstrate below-average creditworthiness relative to other domestic issuers.

B.n

Issuers or issues rated B.n demonstrate weak creditworthiness relative to other domestic issuers.

Caa.n

Issuers or issues rated Caa.n are speculative and demonstrate very weak creditwor-thiness relative to other domestic issuers.

Ca.n

Issuers or issues rated Ca.n are highly speculative and demonstrate extremely weak creditworthiness relative to other domestic issuers.

C.n

Issuers or issues rated C.n are extremely speculative and demonstrate the weakest creditworthiness relative to other domestic issuers.

Note: Moody’s appends numerical modifiers 1, 2, and 3 to each generic rating classification from Aa through Caa. The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of that generic rating category.

National Scale Short-Term Ratings

Moody’s short-term national scale debt ratings are opinions of the ability of issuers in a given country, relative to other domestic issuers, to repay debt obligations that have an original maturity not exceeding one year. Moody’s short-term national scale ratings are a measure of relative risk within a single market. National scale ratings in one country should not be com-pared with national scale ratings in another, or with Moody’s global ratings. Loss expectations for a given national scale rating will generally be higher than for its global scale equivalent.

There are four categories of short-term national scale ratings, generically denoted N-1 through N-4. In each specific country, the first two letters will change to indicate the country in which the issuer is located, i.e. BR-1 through BR-4 for Brazil and TW-1 through TW-4 for Taiwan.

N-1

Issuers rated N-1 have the strongest ability to repay short-term senior unsecured debt obligations relative to other domestic issuers.

N-2

Issuers rated N-2 have an above average ability to repay short-term senior unse-cured debt obligations relative to other domestic issuers.

N-3

Issuers rated N-3 have an average ability to repay short-term senior unsecured debt obligations relative to other domestic issuers.

N-4

Issuers rated N-4 have a below average ability to repay short-term senior unse-cured debt obligations relative to other domestic issuers.

Note: The short-term rating symbols P-1.za, P-2.za, P-3.za and NP.za are used in South Africa.