Moody's current ratings on Woolworths Limited are:

Senior Unsecured (domestic and foreign currency) ratings of A3

Senior Unsecured MTN Program (domestic currency) ratings of (P)A3

Long Term Issuer (domestic currency) rating of A3

RATINGS RATIONALE

Woolworth's A3 ratings are primarily driven by its well entrenched market position in the Australian and New Zealand food and grocery market, a position that is sustainable due to its scale and cost efficiency. This enables it to generate cash flows exhibiting a high degree of stability and dependability through the various stages of the economic cycle, supporting a debt level that is higher than typically observed at the single-A level.

At the same time, the rating is constrained by the company's ongoing need for capital reinvestment, high dividend payout and an expectation that the company will continue to pursue acquisition and/or capital management initiatives. While these are manageable at the A3 level, they are likely to preclude a higher rating.

Woolworth's rating is higher than that of its closest competitor, Wesfarmers Ltd (Wesfarmers - Baa1) the owner of Coles supermarkets. Though both hold similar number of premises, the one notch rating differential is driven primarily by (1) Woolworths larger exposure - in terms of revenue - to the stable food, grocery and liquor retailing sector and (2) Woolworths track record of superior merchandising selection and advanced implementations of supply chain automation.

Rating Outlook

The rating outlook is stable, based on the strength of the company's competitive position and positioning of its financial profile and product offering heading into a potential economic downturn.

What Could Change the Rating - Up

Given Woolworths commitment to the A3 rating level, Moody's does not expect upward pressure to emerge on the rating in the next 12-24 months. Moody's expects that Woolworths will continue to make acquisitions or material returns to shareholders so that key financial metrics remain appropriate for the A3 rating level.

What Could Change the Rating - Down

Downward rating pressure may emerge if there was a slide in fundamental performance of operations, particularly within the core grocery and supermarkets division. This may be evidenced by same store sales growth consistently falling behind inflation.

In addition, should Woolworths make material debt funded acquisitions or capital returns the rating may come under downward pressure if the following key financial metrics could not be maintained over the medium to long term. As such, if debt to EBITDA exceeded 3.5x, EBIT/ interest coverage fell below 3.5x and retained cash flow to net debt fell below 12% the rating may come under downward pressure.

The principal methodology used in rating Woolworths Limited was the Global Retail Industry Methodology published in June 2011. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

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Ian Lewis VP - Senior Credit Officer Corporate Finance Group Moody's Investors Service Pty. Ltd. Level 10 1 O'Connell Street Sydney NSW 2000 Australia JOURNALISTS: (612) 9270-8102 SUBSCRIBERS: (612) 9270-8100 Terry Fanous Managing Director Corporate Finance Group JOURNALISTS: (612) 9270-8102 SUBSCRIBERS: (612) 9270-8100 Releasing Office: Moody's Investors Service Pty. Ltd. Level 10 1 O'Connell Street Sydney NSW 2000 Australia JOURNALISTS: (612) 9270-8102 SUBSCRIBERS: (612) 9270-8100 (C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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