Fitch Ratings has assigned a long-term rating of 'A-' to Nomura Holdings, Inc.'s (NHI, A-/Stable) USD10 billion euro note programme for senior unsecured notes described in the base prospectus dated 29 September 2022.

The rating is assigned to the programme and not to the notes issued under the programme. There is no assurance that notes issued under the programme will be assigned a rating, or that the rating assigned to a specific issue under the programme will be the same as that assigned to the programme.

Key Rating Drivers

The programme rating on senior unsecured notes is aligned with NHI's Long-Term Issuer Default Rating (IDR), in line with Fitch's criteria. The Long-Term IDR is driven by the group's Government Support Rating (GSR, a-).

The senior unsecured notes issued by NHI under the programme will count towards its total loss-absorption capacity (TLAC) debt under Japan's TLAC requirements, as they will be structurally subordinated to the liabilities of its subsidiaries. NHI met the minimum total external TLAC capital ratio requirement of 16% of risk-weighted assets and 6% of leverage ratio exposure at end-March 2022. The ratios exclude buffers for global systemically important banks, capital conservation and countercyclical capital.

We expect the company to continue to issue TLAC-eligible debt as required, including to refinance maturing debt, to maintain comfortable headroom above the 18% risk-weighted assets and 6.75% of leverage ratio exposure requirement at end-March 2024.

Fitch aligns NHI's holding company senior debt ratings with the IDRs of its core operating company, despite their structural subordination features. This equalisation reflects Fitch's view that the probability of default on senior debt issued by holding and operating companies is the same. Fitch believes that the Japanese government would extend financial assistance directly, if required, to the holding company, which is the group's single point of entry, based on consolidated supervision under the Financial Instruments and Exchange Act, and the close interconnectedness with NHI's principal operating entities. We expect government support to flow through to NHI's core subsidiaries if this were to occur.

The senior unsecured notes under the programme will constitute NHI's direct, unconditional, unsubordinated and unsecured obligations and at all times rank pari passu and without prejudice among themselves and at least equally with all other present and future unsecured and unsubordinated obligations.

See Fitch Affirms Nomura at 'A-'; Outlook Stable, published on 19 August 2022, for commentary on NHI's key rating drivers and rating sensitivities.

Rating Sensitivities

Factors that could, individually or collectively, lead to negative rating action/downgrade:

The rating on the programme for senior unsecured notes will be downgraded if NHI's Long-Term IDR is downgraded.

Factors that could, individually or collectively, lead to positive rating action/upgrade:

The rating on the programme for senior unsecured notes will be upgraded if NHI's Long-Term IDR is upgraded.

Best/Worst Case Rating Scenario

International scale credit ratings of Financial Institutions and Covered Bond issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sector-specific best- and worst-case scenario credit ratings, visit https://www.fitchratings.com/site/re/10111579

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

Public Ratings with Credit Linkage to other ratings

NHI's GSR, which supports the IDRs, is linked to Japan's sovereign rating.

ESG Considerations

Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg

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