Japanese utilities are asking for hundreds of billions of yen in loans as they remain shut out of bond markets with the country’s energy policy in confusion following the nuclear crisis at a power station in the northeast.
Power companies face a surge in fuel costs as many atomic plants stay offline, but investors are reluctant to buy debt issued by firms they see as riddled with uncertainty.
Japan’s top lenders, including Mizuho Corporate Bank and state-owned Development Bank of Japan (DBJ), are considering extending a total of ¥550-billion ($6.8-billion U.S.) in loans to Tohoku Electric Power, the regional monopoly serving the areas worst hit by the March 11 earthquake and tsunami, sources familiar with the matter said.
Kansai Electric Power, which covers Osaka and the surrounding areas, has also asked lenders to provide about ¥500-billion in fresh loans, Jiji news reported on Monday.
A Kansai Electric spokesman denied that report, however. A Tohoku Electric spokesman said his company was planning to secure loans from financial institutions but that nothing had been decided.
Kansai Electric and Kyushu Electric scrapped plans to issue bonds in June, citing a jump in market volatility, shelving what would have been the first debt offerings by Japanese utilities since the quake.
Kansai Electric raised ¥200-billion via bond issues in the year that ended in March, while it was slated to redeem ¥170-billion of bonds in the current financial year.
“Utilities are likely to have to wait until September or October before they resume bond issues,” said Akihito Murata, credit analyst at Deutsche Securities.
He said the market wants to see the results of parliamentary debate on a government scheme to help Tokyo Electric Power Co., the operator of the crippled facility in Fukushima, pay compensation.
Chubu Electric Power has said it has secured a total ¥350-billion in loans from DBJ and the country’s top three banks to finance extra fuel costs and planned bond redemptions.
Chubu, which covers Nagoya and its neighbouring areas, is increasing its reliance on fossil fuels after halting its Hamaoka nuclear plant in May following a government request that cited the high risk of a massive earthquake in the region.
Tokyo Electric received ¥2-trillion in emergency loans in late March from its creditor banks, including Sumitomo Mitsui Financial Group .
The firm was desperate for funds to finance its battle to bring under control the ongoing nuclear crisis and to make-up for power shortages by firing up thermal power generation plants.
Utilities now face the prospect of further delays in restarting off-line reactors following the government’s surprise announcement that it would conduct nuclear facility stress tests.