nuclear-news

Japan’s nuclear utilities: debts piling up, banks nervous about funding

 the latest setback over Tepco’s restructuring suggests even the mega banks are getting cold feet over providing unsecured loans to their utility clients.

Lights dim for Japan’s nuclear utilities, Reuters,  By Mia Stubbs TOKYO, April 4 (IFR) – As the future of Tokyo Electric Power remains in question, concerns are building over how other nuclear power operating electric power companies (Epcos) will fund themselves going forward.

As losses pile up, the choices are stark. The companies need either to
fully resume operating their nuclear plants, or hike their customer
tariffs by 20% to boost their flagging revenues.

But the government, judging from recent official pronouncements, seems
unwilling to sanction either of these options in the face of stiff
opposition from the public.

The City of Osaka, for instance, one of the major shareholders of
Kansai Electric, Japan’s second biggest Epco, has announced it will
table a motion to renounce nuclear energy at the next shareholder
assembly in June. The city also resisted Kansai’s campaign to impose
consumption restrictions on the city last summer.

As their sources of revenue decline, some have expressed hopes that
the government could bail out the Epcos yet again. However, Yukio
Edano, the outspoken minister for economy, trade and industry, has
instead dashed expectations by slowly but surely eroding the
assumption that loss-making utilities will be protected by the state.

The day of reckoning, though, could be near. Both Kansai and Chubu,
Toyota’s principal supplier and Japan’s third largest Epco, have
significant bond maturities looming and do not seem in any fit shape
to meet them……
WILL INVESTORS PULL THE PLUG?

In spite of the seemingly placid market-take on the Epcos, all of them
– save Tohoku Electric which is based in the region stricken by last
year’s earthquake – have been shut out of the bond markets. In the
past year, they have only been able to fund their operations by
issuing commercial paper and taking on bank debt.

But “banks may decide to raise loan costs once they take into account
the concentration risk,” warns Takayuki Atake, chief credit analyst at
SMBC Nikko.

Indeed, the latest setback over Tepco’s restructuring suggests even the mega banks are getting cold feet over providing unsecured loans to their utility clients……
http://www.reuters.com/article/2012/04/04/refile-japan-idUSL6E8F4AF120120404

April 5, 2012 - Posted by Christina Macpherson | business and costs, Japan