TOKYO - Moody's Investigators Service Inc. reduced its ratings of the short-term and long-term credit of four Japanese trust banks, citing deteriorating asset quality.

The banks downgraded were Mitsubishi Trust and Banking Corp., Sumitomo Trust and Banking Corp., Yasuda Trust and Banking Corp., and Toyo Trust and Banking Corp., and Toyo Trust and Banking Corp. Their profitability continues to weaken as the quality of their assets erodes and deregulation widens competition, Moody's said

For both Mitsubishi and Sumitomo, Moody's downgraded short-term deposits and standby letters of credit to Prime-2 from Prime-1 and long-term standby letters of credit, deposits, senior debt to A2 from A1.

Also falling to A2 from A1 was the senior debt of Mitsubishi Trust Finance (Asia) Ltd., Mitsubishi Trust Australia, and Sumitomo Trust Finance (HK) Ltd.

Moody's downgraded Yasuda's short-term deposits to Prime-2 from Prime-1. Downgraded to A3 from A2 were long-term letters of credit, deposits and senior debt, along with senior debt of Yasuda Trust Australia Ltd. and Yasuda Trust Asia Pacific Ltd. The actions affected about $670 million of long-term debt, Moody's said.

Moody's downgraded the commercial paper of Toyo Trust (Australia) Ltd. and Toyo Trust International Ltd. to Prime-2 from Prime-1 and the senior debt of the parent to A3 from A1. The action affected about $335 million of long-term debt.

Moody's cited concern about the exposure of the banks to troubles in the Japanese real estate market, to which the banks have lent heavily.

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