Tepco Loans Hinge on Repayment Ability, Bank Lobby Says

Fresh loans for Tokyo Electric Power Co., the operator of the stricken Fukushima Dai-Ichi nuclear plant, depend on the utility’s repayment ability and forthcoming business strategy, the head of Japan’s banking lobby said.

Tokyo Electric’s business plan scheduled for release in March “should include what kind of financial support it needs from banks,” Katsunori Nagayasu, chairman of the Japanese Bankers Association, said at a news briefing in Tokyo today.

The utility known as Tepco is in talks with banks to borrow as much as 2 trillion yen ($26 billion) to help avoid bankruptcy as it compensates survivors of the nuclear disaster and decommissions reactors, two people with knowledge of the discussions said this month. Meltdowns at the plant after last March’s earthquake and tsunami led Japanese utilities to resort to loans for funding as they were unable to sell bonds, a trend that Nagayasu expects to continue.

“The bond market probably won’t accept utilities’ issuance for the time being,” said Nagayasu, who is also chief executive officer of Mitsubishi UFJ Financial Group Inc., Japan’s biggest publicly traded bank. “That’s because of uncertainty over nuclear power policy and power rate hikes. Banks will have to continue to meet utilities’ financial needs with loans.”

Before it's here, it's on the Bloomberg Terminal. LEARN MORE