Tokyo, December 06, 2012 -- Moody's Japan K.K. has assigned a (P) Aa3 rating to Osaka Gas Co., Ltd (Osaka Gas) JPY100 billion domestic shelf registration effective September 30, 2012.

At the same time, Moody's Japan K.K. has assigned an Aa3 rating to the bonds issued by Osaka Gas, and which is a takedown from the shelf registration. The rating outlook is stable.

The specific bond issues rated are:

o JPY 10 billion Series 30 senior unsecured bonds, due 2022

RATINGS RATIONALE

The Aa3 long-term debt rating of Osaka Gas reflects its prominent franchise, its virtual regional monopoly of the supply and distribution network in the Kansai region, and stable earnings from its gas utility operations.

These elements are largely supported by a strong overall regulatory framework, and the total cost principle and the established gas rate adjustment system under the Gas Utility Industry Law. The rating also takes into account the gradual deregulation of the gas market taking place in Japan.

The rating incorporates a one-notch uplift to reflect the support system present in Japan. Moody's expects Osaka Gas to continue to benefit from very strong support from the government and major domestic banks due to its importance to the national and regional economy, and its stable relationship with its banks.

Given that its Aa3 rating incorporates a one-notch uplift due to support system, it is unlikely that the rating will be upgraded to Aa2 in the near future. This is because it is not common in Japan to lift a company's rating (which benefits from support system uplift) to a level that is higher than the highest-rated support provider, which is the Government of Japan.

However, the standalone credit could be pressured upwardly, if the business risk decreases significantly, or if the company can maintain solid cash flow in a stable business environment, resulting in a material improvement in its financial profile.

Negative developments in the current regulatory framework, or continued and rapid deterioration in financial ratios as a result of market competition or deregulation, could have negative rating implications on its standalone credit profile.

The principal methodology used in this rating was "Regulated Electric and Gas Utilities" published on September 30, 2010 and available on www.moodys.co.jp.

Osaka Gas Co., Ltd., the second largest gas company in Japan, is headquartered in Osaka, Japan.

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Kazusada Hirose VP - Senior Credit Officer Corporate Finance Group Moody's Japan K.K. Atago Green Hills Mori Tower 20fl 2-5-1 Atago, Minato-ku Tokyo 105-6220 Japan JOURNALISTS: (03) 5408-4110 SUBSCRIBERS: (03) 5408-4100 Richard C Bittenbender Associate Managing Director Corporate Finance Group JOURNALISTS: (03) 5408-4110 SUBSCRIBERS: (03) 5408-4100 Releasing Office: Moody's Japan K.K. Atago Green Hills Mori Tower 20fl 2-5-1 Atago, Minato-ku Tokyo 105-6220 Japan JOURNALISTS: (03) 5408-4110 SUBSCRIBERS: (03) 5408-4100 Copyright 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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