Edano trigger a spate TEPCO debt downgrade “debt forgiveness” remark

Since May 2011, the corporate bond market after the Great East Japan Earthquake, the temporary stagnation has recovered, but only TEPCO bonds proud of the outstanding balance of the nation’s largest have come a different world.Downgraded by the rating company is one after another, Yukio Edano Chief Cabinet Secretary chanting “debt forgiveness” is the reality, corporate bond market as a whole can not be denied even upset possibility again TEPCO bonds.

May 30, 11, the U.S. rating agency Standard & Poor’s (S & P) was cut two steps to “BB +” from “BBB” rating of the bonds TEPCO.

Edano remark later, plus interest rates are regarded as speculative grade BB + expand again, it’s rank of “investment grade”.TEPCO bonds being downgraded to here for the first time.In addition, I was cut five levels at once to “B +” from BBB indicate the creditworthiness of such force repayment of bank loans also “company rating”.

Reasons for the downgrade, S & P is that the Fukushima Daiichi nuclear accident processing sound, and recorded a final deficit of about 1 trillion 200 billion yen in the year ended March 31, consolidated financial statements, 2011, the financial situation has deteriorated listed.It pointed out that the possibility that in addition to this, formal decision the nature and timing of government support to the damages of the nuclear power plant is opaque still, receive, such as interest rate reduction and exemption of an existing loan or debt forgiveness, the financial assistance from the banks is growing are.

Financial results for TEPCO to only have been published in the May 20 previous to the 10th, I have seen was pulled the trigger of the downgrade that he more likely of debt forgiveness.Edano Yukio Chief Cabinet Secretary was asked in public for the first time the debt forgiveness to financial institutions to finance the TEPCO It is May 13, but it shows the idea and repeatedly since then, the market has become nervous body.

To give a rating of apposition and government bonds before the earthquake, TEPCO bonds was one of the most high quality corporate bonds and about 0.1% plus interest on government bonds (spread), but the earthquake (interest rates soared) price crash.Spreads expanded to about 2.6 percent in mid-April was reduced to 2.2 percent once in early May, but about 2.9% at the time of the downgrade S & P Edano remark later, to expand again.I have more than 3 percent after downgrades.

If you’re called to dismantle the TEPCO to regain pre-quake level Excluding TEPCO, there will be debt forgiveness, but at least you do not change the premise that persist in his now, investment if it becomes “debt forgiveness This is because the concern of the house “will not be able to supply the money to TEPCO has spread.

After the earthquake, spreads to enlarge hung in TEPCO also bonds other than TEPCO, bond issue of April was limited to some, such as Nissan Motor Co., Ltd..However, spread also regained the level before the earthquake centered on stocks with creditworthy, such as the resumption of issuance and NTT Nippon Steel is one after another after May.I’m promoting the adjustment in the direction of issuing bonds in June and later also power company TEPCO and other non-Kyushu Electric Power and Kansai Electric Power Co., Inc..Behind also demand of investors facing corporate bonds, which celebrated its redemption period is strong.

Affect the greater of about 63 trillion yen corporate bond market of Japan, account for only 8% of the total and up to about 5 trillion yen outstanding balance TEPCO bonds.But for now, the situation improved in Kansai Electric Power is planning to issue bonds, you’ve come to situations in which they seek to “market normalization in TEPCO without”.

The problem is the feasibility of “debt forgiveness”.Kan administration resign become a matter of time, and the weight of the “Edano statement” also changed, but it’s unknown if the next administration is it will work with the TEPCO problem.Corporate bond market is likely to be to explore whether can be activated in the “TEPCO without” while anxiety.

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