Japan’s Tepco To Issue First Bond Since Fukushima Disaster

In its first bond sale since the Fukushima nuclear tragedy in 2011, Tokyo Electric Power Co (Tepco) has filed plans to issue US$612 million (70 billion yen) worth of bonds, and investors who view this as guaranteed by the state may take interest.

According to Reuters, Tepco’s power transmission and distribution unit Tepco Power Grid Inc has filed with the Kanto Local Finance Bureau plans to issue a three-year bond worth US$262 million (30 billion yen) and a five-year bond worth US$349.6 million (40 billion yen). The coupons are expected to be set by 17 March 2017.

Tepco – which has US$5.681 billion (650 billion yen) in bonds due by March 2018 – wants to secure regular financing by regular bond issues, the company said.

Tepco has hired six companies to manage the bonds issue: SMBC Nikko Securities, Nomura Securities, Mitsubishi UFJ Morgan Stanley Securities, Mizuho Securities, Daiwa Securities, and Shinkin Securities.

After the Fukushima disaster, the world’s worst nuclear meltdown since Chernobyl in 1986, Tepco was basically nationalized by the government, which now owns 50.1 percent of the company.

Some investors see the government participation in Tepco as an implicit guarantee by the state for the utility.

Tepco is facing multi-billion costs related to decommissioning the Fukushima plant Late last year, the Japanese government almost doubled its forecast for costs to US$188 billion (21.5 trillion yen).

More recently, Tepco has had to cope with poor communications surrounding reported radiation levels inside a Fukushima reactor. While the radiation levels reported are higher than any reported since the 2011 disaster—prompting a global media scare—this is more of a Tepco PR failure than real news. Tepco is sending in robots closer to spent fuel as part of the recovery process, so radiation readings will necessarily be higher. The problem is largely Tepco’s inability to express itself to the public.

By Tsvetana Paraskova for Oilprice.com

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