S&P: MUFG Alternative Fund Services (Cayman) Assigned 'A/A-1' Ratings; Outlook Stable

S&P Global Ratings today said it has assigned its 'A' long-term and 'A-1' short-term issuer credit ratings to MUFG Alternative Fund Services (Cayman) Ltd., which Mitsubishi UFJ Financial Group Inc. (MUFG; A-/Stable/--) wholly and indirectly owns. The outlook on the long-term issuer credit rating is stable.

The ratings on MUFG Alternative Fund Services (Cayman) reflect our assessment that it is a core subsidiary of MUFG. Under our group rating methodology, we generally consider a core subsidiary as highly likely to receive group support in times of need. We therefore usually equalize our ratings on a core entity with the group credit profile (GCP), which is our opinion of a group's creditworthiness as if the group were a single legal entity and is conceptually equivalent to an issuer credit rating. As such, our ratings on MUFG Alternative Fund Services (Cayman) are equal to those on MUFG's core banking subsidiaries.

As one of the global custody and fund administration arms of MUFG, the Cayman-based company provides fund administration services primarily for hedge funds and funds of hedge funds. Its business is aligned with MUFG's strategy to enhance global services under integrated management of the group's investor services and asset management business. We believe its financial, management, and operational ties, including risk management, indicate its strong link with Mitsubishi UFJ Trust and Banking Corp. and other group members. Therefore, the group status of MUFG Alternative Fund Services (Cayman) is unlikely to decline in the next two years or so, in our view.

The stable outlook reflects the stable outlooks on the core banking subsidiaries of MUFG, and indicates our view that the ratings on MUFG Alternative Fund Services (Cayman) are likely to remain steady for the next two years.

We might downgrade MUFG Alternative Fund Services (Cayman) if we revise down the GCP on MUFG. We might also consider a downgrade if global fund administration and custody businesses become strategically less important to MUFG, and we see a reduced likelihood that the Cayman-based company will receive extraordinary group support in times of need. Conversely, we might upgrade the company if we revise upward the GCP.

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