Sovereign Debt Relief through COVID by Global Interdependence Center

GIC - Drexel University Sovereign Debt Restructuring Conference, 26 February 2021

Sovereign Debt Relief through COVID Elena Duggar, Chair of Moody’s Macroeconomic Board, Associate Managing Director, Strategy & Research

February 2021

Agenda

COVID-19 crisis in historical perspective A deeper global recession but shallower financial shock

Debt Service Suspension Initiative (DSSI) in numbers Country-specific differences point to the need for tailored approaches to debt sustainability assessment and sovereign debt restructuring

Moody’s approach to the DSSI and rating management through the COVID-19 crisis Measured and transparent rating approach focused on the most vulnerable issuers. Medium-term sovereign credit implications will depend on ability to reverse debt trajectories ahead of future shocks Sovereign Debt Relief through COVID, February 2021

Key Messages The COVID-19 shock will contribute to unprecedented increases in debt levels globally

The economic contraction in many advanced economies is unprecedented and the most severe since the Great Depression

Emerging markets have experienced similar contractions during some of their most severe crises in the past

While debt affordability is improving in many advanced economies due to low interest rates, debt affordability in emerging and frontier markets is deteriorating across regions

Country-specific differences call for tailored approaches to debt sustainability assessment and debt restructuring

Most vulnerable sovereigns are emerging and frontier economies exposed to tourism, low commodity prices and loss of market access

Moody’s has taken a measured and transparent rating approach focused on the most vulnerable sectors and issuers

Credit implications of the DSSI and the Common Framework for Debt Treatments beyond the DSSI will depend on whether private-sector creditors incur losses

Moody’s 2021 outlook for the sovereign sector is negative. Sovereign defaults were elevated in 2020 and may remain so in 2021

So far, 46 of 73 eligible countries have participated in the DSSI. To date, the DSSI covers more eligible countries but less debt compared with past debt-relief initiatives

Debt levels, debt sustainability positions and the creditor universe differ greatly across DSSI countries

Debt relief benefits are uneven across countries, averaging 0.6% of GDP in 2020 vs. an increase in external financing needs of 5% of GDP

Sovereign Debt Relief through COVID, February 2021

COVID-19 crisis in historical perspective

Global debt levels at an unprecedented high

Advanced economy debt surpasses WWII peak; EM debt at all-time high General Government Debt (% of GDP)

WWI

140

Global Financial Crisis COVID

WWII

120 100 80

Advanced economies

60 40 20 0

Emerging markets 1880

1890

1900

1910

1920

1930

1940

1950

1960

1970

1980

1990

2000

2010

2020

Sources: IMF Fiscal Monitor, October 2020

Sovereign Debt Relief through COVID, February 2021

COVID growth shock as severe as deepest EM crises For many advanced economies, COVID shock most severe crisis since the 1930s Real GDP (YoY % change) 10

Germany

5 0 -5 -10

1980

Russia

2020 Italy

Spain

-5

-10

-15

Korea

Thailand

Zambia

Argentina

Brazil

-5

-10

-5

-10

-15

-10

-15

5 0 -5

Sources: IMF WEO, October 2020

Sovereign Debt Relief through COVID, February 2021

But quick recovery of financial conditions

Shallower and shorter financial shock compared with the global financial crisis, due to policy support and more resilient banking systems US, euro area and emerging markets Moody’s Financial Conditions Indicator

Looser conditions

Euro area

1.5

EMs Covid-19

Global financial crisis

Standard deviations above long-term average

1.0

0.5

-0.5

Standard deviations below long-term average

-0.5 -1.0

Tighter conditions

-1.5

June 2020

-2.5

-3.5 2007

2009

2011

2013

2015

2017

2019

Feb 2021

2021

Moody’s Financial Conditions Indicators combine 17 financial variables to offer a composite picture of financial conditions. February 2021 data is preliminary. EM indicator includes Argentina, Brazil, Mexico, China, India, Indonesia, Russia, Turkey and South Africa. Source: Moody's Investors Service

Sovereign Debt Relief through COVID, February 2021

Debt affordability will worsen in most emerging markets Low interest rates will support debt servicing capacity in advanced economies Interest payments to revenue (%)

EMERGING MARKETS

ADVANCED ECONOMIES France

Germany

Italy

Japan

12%

Asia Pacific

US Forecasts

10%

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020 2021F 2022F

LATAM

Middle East & North Africa

12%

10%

0% 2010

Emerging Europe

0% 2010

Forecasts

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020 2021F 2022F

Source: Moody's Investors Service

Sovereign Debt Relief through COVID, February 2021

DSSI in numbers

DSSI is among the measures to counter the effects of the pandemic Debt Service Suspension Initiative (DSSI) » $5 billion in 2020 by World Bank estimates

World Bank & MDB lending » $124 billion in 2020 by the

World Bank, AfDB, ADB, IDB and EBRD, 30% over 2019

IMF financial assistance » $106 billion to 85 countries

IMF debt service relief » $489 million to 29 countries via the Catastrophe Containment and Relief Trust

Fiscal stimulus » $14 trillion of global fiscal support by IMF estimates

Central bank support » Unprecedented central bank support, following lessons learned in the GFC

Sources: The World Bank, COVID 19: Debt Service Suspension Initiative, February 2021; IMF, Fiscal Monitor Update, January 2021; IMF, COVID-19 Financial Assistance and Debt Service Relief; C. Humphrey and A. Prizzon, Scaling up multilateral bank finance for the Covid-19 recovery, November 2020; and Moody’s Investors Service

Sovereign Debt Relief through COVID, February 2021

DSSI timeline 2020 participation 15 April 2020

DSSI extended

G-20 extends DSSI by six months

DSSI to suspend official bilateral debt service to June 30, 2021, with fiveyear repayment period and one-year grace period (six years total)

G-20 endorses the Common Framework for Debt Treatments on November 13, 2020 to strengthen creditor coordination

DSSI to suspend official bilateral debt service due May-December 2020, with three-year repayment period and a one-year grace period (four years total)

2020

9-11 April 2021

14 October 2020

DSSI endorsed G-20 endorses the DSSI effective May 1, 2020 and publishes term sheet

2021 participation

45 of 73 eligible countries participate in 2020 DSSI »

45 countries benefit from $5 billion in temporary debt service suspension, accounting for over 75% of eligible official bilateral debt service under the DSSI in 2020 The World Bank notes that the funds supported substantial COVID-19related spending

18 countries participate in 2021 DSSI to date »

18 countries have participated in the extended DSSI as of early February 2021 (17 of which already participated in the 2020 DSSI), bringing total participation to 46 countries Three countries have commenced negotiations with official creditors under the Common Framework

DSSI review »

At the IMF-World Bank Spring Meetings, the Paris Club and the G-20 will review if the economic and financial situation requires further extending the DSSI by another six months

The Common Framework is intended to address debt relief beyond the DSSI but details are still uncertain

2021 Sovereign Debt Relief through COVID, February 2021

Most DSSI-eligible countries are in Africa and Asia 35 of the 73 DSSI-eligible countries are rated by Moody’s Regional participation in the DSSI (number of countries)

40 35

Participating, rated

Participating, not rated

Non-participating, rated

Non-participating, not rated

30 25 20 15 10 5 0

Africa

East Asia

South Asia

Europe and Central Asia Latin America and the Caribbean

Middle East and North Africa

Source: Moody’s Investors Service

Sovereign Debt Relief through COVID, February 2021

The DSSI covers more eligible countries but less debt compared with past debt relief initiatives MULTILATERAL DEBT RELIEF INITIATIVE (MDRI)

HEAVILY-INDEBTED POOR COUNTRIES INITIATIVE (HIPC)

DEBT SERVICE SUSPENSION INITIATIVE (DSSI)

$76 billion in debt service relief

46 participating out of 73 eligible countries 36 participating out of 39 eligible countries

$43 billion in debt relief

36 participating out of 39 eligible countries $5 billion in debt deferral in 2020

» »

Official sector debt

Conditionality similar to IMF loans Participating countries Non-participating countries

1996 – to date

Official sector debt: full cancellation on IMF, International Development Association and African Development Bank debt Conditionality already incorporated in HIPC process

2005 – to date

Official bilateral debt, to address liquidity challenges

Countries commit to use funds towards pandemic spending, disclose all public sector debt, and no new non-concessional borrowing

2020 – to date

HIPC and MDRI debt relief by IMF estimates in end-2017 present value terms. Sources: IMF HIPC Factsheet; IMF, Heavily Indebted Poor Countries (HIPC) Initiative and Multilateral Debt Relief Initiative (MDRI)-Statistical Update, 6 August 2019; The World Bank, Covid-19: Debt Service Suspension Initiative, 4 February 2021

Sovereign Debt Relief through COVID, February 2021

Debt sustainability positions differ greatly across DSSI-eligible countries DSSI participating and non-participating eligible countries, by Moody’s rating and World Bank (WB) assessment

Ca-Caa1

B1-B3

Ba3

Key Takeaways The 73 DSSI-eligible countries have very different debt sustainability positions:

The World Bank Risk of Debt Distress assessments range from “In distress” for six countries, “High risk” for 30 countries, “Moderate risk” for 20 countries and “Low risk” for nine countries (eight countries have no World Bank assessment)

Of the 35 countries rated by Moody’s, seven are in the Ca-Caa1 range as of February 2021, 24 are in the B3-B1 range and four are rated Ba3

Of the 35 rated countries, 21 have participated in the DSSI so far

No WB assessment

Low Moderate

High

In distress

DSSI Non-DSSI

25 13

6 1

12 12

3 1

Sources: The World Bank, Covid-19: Debt Service Suspension Initiative, 21 December 2020 and Moody’s Investors Service

Sovereign Debt Relief through COVID, February 2021

Wide range of debt-to-GDP levels across DSSI-eligible countries 2020 Debt to GDP (%) 140%

Participating countries

120%

Africa

South East Asia

100% 80%

Europe LATAM and and Central Caribbean Asia

Key Takeaways

MENA

The 73 DSSI-eligible countries have very different debt-to-GDP levels:

The average debt-to-GDP ratio across the 73 countries was 58% in 2020

Countries participating in the DSSI have a slightly higher average debtto-GDP ratio, at 64% vs. 45% for countries that have not joined the initiative

Debt-to-GDP ratios range from about 10% to over 120% of GDP in both groups

Overall, eight countries have debt-toGDP ratios over 90% of GDP. All but one have taken part in the DSSI

60% 40%

140%

Yemen Djibouti

Dominica St. Lucia Grenada

Kyrgyz Tajikistan

Maldives Pakistan Fiji Samoa PNG Myanmar Tonga Nepal Afghanistan

Cabo Verde Mozambique Angola Zambia Congo, Rep. Gambia Guinea-… Sierra Leone Togo Malawi Kenya Mauritania Senegal Burundi Ethiopia Niger Lesotho C.A.R. Burkina Faso Chad Uganda Guinea Mali Cameroon Madagascar Côte d'Ivoire Tanzania Comoros DRC

20%

Non-participating countries

120% 100% 80% 60% 40%

St. Vincent Haiti Nicaragua Honduras Guyana

Moldova Uzbekistan Kosovo

Bhutan Lao PDR Vanuatu Bangladesh Cambodia Marshall Isl Kiribati Micronesia Tuvalu Solomon Isl Timor-Leste

Ghana South Sudan Liberia Rwanda Benin

20%

Data available for 45 participating and 25 non-participating countries; data not available for one participating (Sao Tome and Principe) and two non-participating countries (Mongolia and Somalia). Source: IMF, WEO October 2020

Sovereign Debt Relief through COVID, February 2021

Debt relief benefits uneven across countries

The average potential debt relief is 0.6% of GDP in 2020 against an average expansion of external financing needs of 5% of GDP Potential DSSI savings (% of GDP) 2.5%

Participating countries

Africa

South East Asia

2.0% 1.5%

Europe and Central Asia

LATAM and Caribbean

MENA

1.0%

Key Takeaways DSSI benefits are uneven across countries but generally much smaller than the large increases in government funding needs brought about by the COVID crisis:

The average potential DSSI savings represent 0.6% of GDP in 2020 and 0.6% of GDP in 2021 across the 73 countries, according to World Bank data

The median 2020 DSSI savings are 0.6% of GDP for countries participating in the DSSI vs. 0.3% of GDP for non-participating countries

Potential benefits range from 0% to 2% of GDP (other than for Bhutan)

2.5% 2.0%

9.9%

Non-participating countries 5.8%

2020 2021

1.5% 1.0%

Haiti St. Vincent Guyana Nicaragua Honduras

Uzbekistan Moldova Kosovo

Bhutan Lao PDR Cambodia Vanuatu Mongolia Bangladesh Solomon Isl Timor-Leste

Ghana Liberia Rwanda Benin Nigeria Somalia

0.5% 0.0%

Djibouti Yemen

Dominica Grenada St. Lucia

Kyrgyz Tajikistan

Tonga Maldives Samoa Pakistan Myanmar Fiji Afghanistan PNG Nepal

0.0%

Mozambique Congo, Rep. Angola Mauritania Cabo Verde Zambia Kenya Cameroon Gambia Togo Senegal Ethiopia C.A.R. Chad Uganda Mali Sierra Leone Malawi Niger Lesotho Guinea Tanzania Comoros DRC Guinea-Bissau Burundi Burkina Faso Madagascar Côte d'Ivoire Sao Tome & P

0.5%

Data not available for five non-participating countries (South Sudan, Marshall Islands, Kiribati, Micronesia and Tuvalu). Source: The World Bank

Sovereign Debt Relief through COVID, February 2021

Evolving creditor universe and debt type change the dynamics of debt negotiations 2021 foreign debt service of DSSI-eligible countries (% of total)

Key Takeaways Sovereign debt markets have evolved over time:

Share in total bilateral debt service (%) China

Other

100%

Larger share of domestic debt, with local banks serving as major creditors

Larger share of investors that invest on behalf of others, including pension funds, insurance companies, central banks and sovereign wealth funds

Paris Club is no longer the largest official creditor

China has become a large creditor

Larger role of project financing and secured lending such as commoditybacked lending

90%

Other private 17%

80%

China 24%

70% 60% 50%

Bonds 15%

40% 30% 20%

Source: The World Bank

10%

Multilateral 31%

Myanmar Angola Guyana Maldives C.A.R. Cote d'Ivoire PNG Congo Ethiopia Guinea Liberia Mali Cambodia St. Lucia Pakistan St. Vincent Niger Cameroon Honduras Bangladesh Ghana Mauritania Uzbekistan Lao PDR Benin Cabo Verde Other

Bilateral 13%

All of these changes affect creditor coordination, the ability and willingness of creditors to take losses, and the debtorcreditor negotiations

Sovereign Debt Relief through COVID, February 2021

Country-specific differences point to the need for tailored approaches to sovereign debt restructurings Market exclusion is highly correlated with the losses experienced by investors Chronic economic stagnation

Institutional and political factors

High debt burden

90 Greece (12)

80 Venezuela (17)

Grenada (13)

Loss (%)

Cyprus (13)

Barbados (18)

40 Uruguay (03) 30 20

Ecuador (08)

Ecuador (99) Pakistan (99)

St. Kitts and Nevis (11) Dominica (03)

Ukraine (98-00)

The period of market exclusion and financing costs depend on the external environment and creditors’ expectations for future policy, growth and debt sustainability

Loss of market access may occur even if there are no rating changes

Between 1997 and 2019, the average period of market exclusion was 6.1 years after default and 4.9 years after default resolution

The current low-yield environment and the global and external nature of the COVID-19 shock will likely result in shorter periods of market exclusion, but country specifics will matter

Nicaragua (08) Moldova (02)

Belize (06)

Ukraine (15) Republic of Congo Mozambique (16) Jamaica (10) Cote d'Ivoire (11) Dominican Rep. (05)

The trade-off for policymakers in sovereign debt restructurings of privatesector debt is between the benefits of debt relief and the cost of potential loss of market access and higher future financing costs

Argentina (01)

Grenada (04) Mozambique (17) Belize (17)

Argentina (14) Jamaica (13)

10 0

Cote d'Ivoire (00)

Russia (98)

Seychelles (08) Belize (12)

Banking crisis

Key Takeaways

6 8 10 12 Time from default to re-access (years)

Cases color-coded by the cause of default. Source: Moody’s Investors Service, The causes of sovereign defaults, August 2020

Sovereign Debt Relief through COVID, February 2021

Moody’s approach to the DSSI and managing ratings through the COVID crisis

Measured and transparent rating approach is focused on the most vulnerable sectors and issuers Sovereign rating distribution moved rightward, but only a little

» The COVID-19 crisis created a severe credit shock across many sectors and regions, and broad deterioration in credit quality

Investment-grade

Caa3

Caa2

Caa1

Ba3

Ba2

Ba1

Baa3

Baa2

Baa1

Sources: Moody’s Investors Service, Coronavirus and oil price shocks: managing ratings in turbulent times, March 2020; From synchronized downturn to uneven recovery: credit risks in turbulent times, September 2020

Aa3

Aa2

Aa1

» Published heat maps and research across sectors communicated transparently to the market and identified the most exposed segments

Aaa

» Rating actions have been selective and concentrated on the most vulnerable issuers and sectors

December 31, 2020

# of Sovereign issuers

» In such an environment, we change ratings to ensure the rating system continues to reflect our views on the ordinal ranking of credit risk

January 1, 2020

Speculative-grade

Sovereign Debt Relief through COVID, February 2021

Sovereign rating drift negative but below past peaks » Rating volatility in 2020 was only slightly above the 1983-2020 average level and below past peaks » Rating drift was negative in 2020 but less than during the 2015 oil price shock or the European debt crisis in 2010-11 » Downgrade rate in 2020 was higher relative to the prior three years but below peaks in 2015, 2011 and 1997 Sovereign rating drift and volatility, 1983-2020 Avg Upg Notches

0.8

Avg Dng Notches

Rating Drift

Rating Volatility

0.6 0.4 0.2 0.0 -0.2 -0.4 -0.6 -0.8

Rating volatility is defined as the sum of the average number of notches upgraded and downgraded per issuer over a 12-month period. Rating drift is defined as the difference of the average number of notches upgraded and downgraded per issuer over a 12-month period. Source: Moody’s Investors Service

Sovereign Debt Relief through COVID, February 2021

Credit implications of the DSSI and the Common Framework depend on whether private-sector creditors incur losses » We typically do not rate official-sector bilateral debt » Two direct channels of impact of official-sector debt relief on private-sector debt repayments: – Comparability of treatment provisions that could result in losses on private-sector debt – Cross-default clauses that could trigger a default on bank loans or some bond contracts » The DSSI has not led to any rating changes to date. Five ratings were placed on review in May/June 2020; reviews were completed in August 2020 without changes to the rating level after we concluded that current ratings captured the risk of losses to the private sector » The COVID crisis represents a large negative shock to most sovereigns. The DSSI provides modest liquidity relief but DSSI savings are small relative to the fiscal deterioration from the shock » If the Common Framework applies to countries with already unsustainable debt loads, ratings would already be very low anticipating default Sovereign Debt Relief through COVID, February 2021

When a debt security is in default or approaching default, Moody’s positions ratings to reflect expected recoveries »

Any event, including a default, which changes Moody’s loss expectation could lead to rating changes Defaults involving very small losses could in principle entail no rating change, however losses are usually larger and most ratings in default are in the Caa-C range

Moody’s does not have a “D” or “SD” rating. We position ratings with respect to expected recoveries and communicate default occurrence in our research. Source: Moody’s Rating Symbols & Definitions, January 2021

Approximate expected recoveries associated with ratings for defaulted securities

Moody’s ratings address both the risk of default and the likely severity of loss upon default

Expected recovery rate

Fundamental

99 to 100%

B1*

Aaa

97 to 99%

B2*

95 to 97%

B3*

90 to 95%

Caa1

Baa

80 to 90%

Caa2

65 to 80%

Caa3

35 to 65%

Less than 35%

*For instruments rated B1, B2, or B3, the uncertainty around expected recovery rates should also be low. For example, if a defaulted security has a higher than a 10% chance of recovering less than 90%, it would generally be rated lower than B3.

Global Long-Term Rating Scale

Obligations rated Aaa are judged to be of the highest quality, subject to the lowest level of credit risk. Obligations rated Aa are judged to be of high quality and are subject to very low credit risk. Obligations rated A are judged to be upper-medium grade and are subject to low credit risk. Obligations rated Baa are judged to be medium-grade and subject to moderate credit risk and as such may possess certain speculative characteristics. Obligations rated Ba are judged to be speculative and are subject to substantial credit risk.

Obligations rated B are considered speculative and are subject to high credit risk.

Caa

Obligations rated Caa are judged to be speculative of poor standing and are subject to very high credit risk. Obligations rated Ca are highly speculative and are likely in, or very near, default, with some prospect of recovery of principal and interest. Obligations rated C are the lowest rated and are typically in default, with little prospect for recovery of principal or interest.

Ca C

*Moody’s appends numerical modifiers 1, 2, and 3 to each generic rating classification from Aa through Caa.

Sovereign Debt Relief through COVID, February 2021

Ratings could be slow to recover post default » The median government bond rating, at Caa2 at the time of default, was at B3 four years after default » Low median rating post default reflects re-default risk and the length of time it takes to address the underlying problems that caused default » The rating post-default will reflect any material benefits from the default/debt reduction, remaining credit challenges and economic, policy and debt trajectory expectations Average and median rating of sovereign issuers around default since 1983 Average rating

Ba1

Median rating

Ba2 Ba3 B1 B2 B3 Caa1 Caa2

t-5

t-4

t-3

t-2

t-1 t Years prior to and after default

t+1

t+2

t+3

t+4

t+5

Source: Moody’s Investors Service

Sovereign Debt Relief through COVID, February 2021

Moody’s 2021 sovereign outlook is negative CURRENT RATING OUTLOOK

CREDIT DRIVERS

Pandemic fallout continues to weigh on economic activity, government finances, and complicates policy choices POS

STA

NEG

MAJOR CREDIT IMPACT CHANNELS

N/A

Tourism

Commodities

Market access

Most vulnerable sovereigns are emerging and frontier economies exposed to travel and tourism, low commodity prices and curtailment of market access Credit analysis focuses on the risk of lasting changes to sovereign credit profiles arising from the shock. In most countries, rating implications will depend on the economic recovery and the effectiveness of policies in reversing the debt buildup over time Source: Moody’s Investors Service

Sovereign Debt Relief through COVID, February 2021

Sovereign defaults were elevated in 2020 and might remain so in 2021 » Large increases in debt levels globally, economic activity impaired for several years » Frontier markets exposed to negative credit effects via capital flows, travel, tourism and commodity price channels » As of the end of 2020, 18 sovereign ratings were in the Caa-C category, representing 13% of all sovereign ratings, an all-time high

# of Moody's rated sovereign bond defaults

5 4 3 2 1 0

Annual default rate (%)

# of sovereign ratings - RHS

160 140 120 100 80 60 40 20 0

Total number of sovereign ratings

Number of defaults/default rate, %

Moody’s-rated sovereign defaults spiked to record high in 2020

Source: Moody’s Investors Service

Sovereign Debt Relief through COVID, February 2021

Moody’s related publications Methodology: »

Sovereign Ratings Methodology, November 2019

General Principles for Assessing Environmental, Social and Governance Risks Methodology, December 2020

Outlook: »

Global Macro Outlook 2021-22 (February 2021 Update): G-20 economies will return to growth in 2021 but the recovery will not be uniform, February 2021

Sovereign – Global: Negative 2021 outlook as pandemic fallout weighs on economic activity, government finances, complicates policy choices, November 2020

Sector research: »

Sovereigns – Global: Credit implications of stricter terms under G-20's debt-relief Common Framework will become clearer with application, February 2021

Non-Investment-Grade Sovereigns – Global: Uneven global economic recovery intensifies fiscal and liquidity challenges, December 2020

Sovereigns – Sub-Saharan Africa: More dispersed creditor base complicates potential debt restructuring negotiations, November 2020

Sovereigns – Emerging markets: FAQ on the evolution of credit risks related to G-20's debt service suspension initiative, August 2020

Sovereign defaults research: »

Topic page: www.moodys.com/sdr

Sovereign Defaults Series: The causes of sovereign defaults, August 2020

Sovereign defaults, deposit freezes and private-sector external debt moratoriums, May 2020

Sovereign default and recovery rates, 1983-2019, May 2020

Coronavirus — Global: FAQ on the credit implications of moratoriums on private-sector debt, April 2020

Sovereign Defaults Series: FAQ: The increasing incidence of local currency sovereign defaults, April 2019

Sovereign Debt Relief through COVID, February 2021

Elena Duggar

Matt Robinson

Marie Diron

Alastair Wilson

Associate Managing Director

Managing Director

Credit Strategy & Research

Sovereign Risk

Global Sovereign Risk

+1.212.553.1911

+44.207.772.5635

+44.207.772.1968

+44.207.772.1372

elena.duggar@moodys.com

matt.robinson@moodys.com

marie.diron@moodys.com

alastair.wilson@moodys.com

moodys.com

This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history.

© 2021 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved. CREDIT RATINGS ISSUED BY MOODY'S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE APPLICABLE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS (“ASSESSMENTS”), AND OTHER OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS, AND PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS OR PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER. ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK. All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing its Publications.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information. NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING, ASSESSMENT, OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER. Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody’s Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $5,000,000. MCO and Moody’s Investors Service also maintain policies and procedures to address the independence of Moody’s Investors Service credit ratings and credit rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody’s Investors Service and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.” Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors. Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively. MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY550,000,000. MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.

Sovereign Debt Relief through COVID, February 2021