Tepco May Get JBIC Funding Help for Overseas Asset Sales

The Japan Bank for International Cooperation may help fund Tokyo Electric Power Co.’s proposed sale of overseas energy assets as the operator of the crippled Fukushima Dai-Ichi nuclear plant seeks to shore up its finances.

The state-run lender is considering loans to domestic companies interested in acquiring foreign energy projects that the utility might sell, Chief Executive Officer Hiroshi Watanabe said in an interview. The bank may also offer emergency loans to Tokyo Electric should prices of liquefied natural gas, a vital fuel for thermal power plants, surge, he said.

Tokyo Electric yesterday had its credit rating cut to junk by Moody’s Investors Service as it struggles to contain the worst nuclear crisis in 25 years. The utility is under pressure to sell assets to raise at least 600 billion yen ($7.5 billion) to scrap reactors and compensate victims of the disaster, which was triggered by a record earthquake and tsunami on March 11.

“We’d consider offering loans if potential buyers are Japanese companies,” Watanabe, 61, said in an interview on June 10 in Tokyo. “Tepco-invested projects overseas seem to be performing well.”

Watanabe’s bank has notified Japanese utilities including Tokyo Electric that the lender is preparing loans for LNG and oil imports in case prices soar in months ahead, he said. More oil, gas and coal are being burned at thermal power generators around the country to supplement electricity after utilities shut down reactors following the earthquake.

Reactor Shutdowns

Further reactor shutdowns planned for checks and maintenance by the end of August mean 75 percent of Japan’s nuclear power capacity is likely to be idled or damaged during peak summer demand, data compiled by Bloomberg showed last month.

“We are considering the sale of assets in the process of restructuring our business,” said Atsushi Sugiyama, a Tepco spokesman. “Of course, that includes overseas assets.”

East Timor’s Bayu-Undan LNG plant run by ConocoPhillips, and Indonesia’s Paiton coal-fired electric power plants are among overseas projects that Tokyo Electric has invested in, according to Tepco’s website. The utility also has a stake in a dual-purpose desalination and electricity-generating plant in the United Arab Emirates and owns stakes in power plants in the Philippines.

The utility’s overseas assets are valued at about 1 trillion yen, Jiji Press reported on April 23.

Slashed to Junk

Tepco fell 2.9 percent to 305 yen at the 3 p.m. close of Tokyo Stock Exchange trading. It has plunged 86 percent since March 10. The benchmark Topix index of shares gained 1 percent today, the biggest increase in a week.

Moody’s yesterday lowered Tepco four steps to B1 from Baa3 and said the rating may be reduced further as costs related to the Fukushima disaster escalate. Moody’s assessment is now in line with the ranking by Standard & Poor’s, which slashed its assessment of the utility’s debt by five levels on May 30.

Japanese credit rating companies maintain investment-grade evaluations for Tepco. Rating and Investment Inc. on June 1 lowered the utility to A-, the seventh-highest level. Japan Credit Rating Agency Ltd. cut it to A+, the fifth highest, on May 13.

Prime Minister Naoto Kan’s cabinet agreed on June 14 to provide a safety net for the utility while it pays claims for damages related to the nuclear meltdown at the Dai-Ichi plant that could exceed $130 billion.

Tepco has the equivalent of $84.7 billion of debt maturing before the end of 2049, Bloomberg data show.

To contact the reporter on this story: Takako Taniguchi in Tokyo at ttaniguchi4@bloomberg.net.

To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net.

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