Japan’s government urged Tokyo Electric Power Co.’s creditors to help support the utility, which is revising a plan to stabilize its nuclear plant amid evidence the damage is worse than previously considered.
“Our basic stance is to get cooperation from every stakeholder as we try to minimize the burden for the Japanese public,” Finance Minister Yoshihiko Noda said at a news conference in Tokyo today. “Tepco and financial institutions should discuss this with these principles in mind.”
Noda spoke a day after the head of Mitsubishi UFJ Financial Group Inc., Japan’s biggest publicly traded bank, criticized a top government official for suggesting that lenders forgive loans made to Tokyo Electric before the crisis. Writing off debt would prevent banks from providing the company with new loans because of increased default risk, said analyst Yoshinobu Yamada.
“Megabanks wouldn’t be able to give fresh loans to Tepco without full-fledged government guarantees” as they would have to downgrade the quality of the utility’s outstanding borrowings, said Yamada, a banking analyst at Deutsche Bank AG in Tokyo.
Tepco fell 11 percent to 375 yen at 1:08 p.m. on the Tokyo Stock Exchange, the biggest decline since April 5, as it prepares to provide an update today on its road map for bringing the reactors and spent fuel pools under control. The shares are down 82 percent since the March 11 quake and tsunami crippled its Fukushima Dai-Ichi nuclear station.
Out of the blue
A group of Japanese lenders including Mitsubishi UFJ, Sumitomo Mitsui Financial Group Inc. and Mizuho Financial Group Inc. provided about 2 trillion yen ($25 billion) in loans to Tepco, as the utility is known, after the record quake.
The government on May 13 unveiled a plan to provide aid to the company to shield it from bankruptcy. Chief Cabinet Secretary Yukio Edano said on the same day that lenders may have to write off loans made to the company before the disaster.
“Mr. Edano’s comments came out of the blue and seem unreasonable,” Mitsubishi UFJ Chief Executive Officer Katsunori Nagayasu told reporters in Tokyo yesterday. “It seems that the government stepped into relations between private businesses.”
Asked about Edano’s remarks at today’s briefing, Noda said the government has yet to nail down specific details.
Naoyuki Matsumoto, a spokesman for Tepco, declined to comment on whether the utility needs its lenders to forgive loans made before the magnitude-9 temblor.
Aid vital
“We would like to continue asking our main lenders to provide us with loans with lower interest,” Matsumoto said. “We’re preparing to offer compensation to victims fairly and quickly, and government aid is vital for doing so.”
Trade Minister Banri Kaieda said financial institutions are likely to cooperate with Tepco’s plans to recompense victims of the disaster, which has sent radiation into the air and sea and forced the evacuation of about 50,000 families. He added that it’s “a matter between private companies, and we’re not in the position at this stage to tell them directly what to do.”
Financial Services Minister Shozaburo Jimi also said decisions on whether to forgive loans made to Tepco should be left to the utility and its creditors.
Tepco will present its revised plan for containing the nuclear crisis at about 5:30 p.m. local time, Junichi Matsumoto, a company official, said at a news conference today. Under the road map released on April 17, Tepco forecast a sustained reduction in radiation levels at the reactors within three months and a cold shutdown, where core reactor temperatures fall below 100 degrees Celsius, in six to nine months.
All rods melted
Both Prime Minister Naoto Kan and Tepco President Masataka Shimizu said yesterday they don’t expect to change the timetable.
In March assessments of damage to the fuel rods in the reactor cores, Tepco said there may have been a partial or a complete meltdown. All rods in the core of reactor No. 1 melted and dropped out of their assembly by early March 12, Tepco said on May 15, after gauges were installed or repaired. The utility said yesterday the same may have occurred in reactors 2 and 3.
Moody’s Investors Service yesterday cut Tepco’s credit ratings and put them on review for further possible downgrade after the company confirmed the meltdown. Moody’s also warned that it may cut debt ratings of the company’s lenders should they forgive loans made before the quake.
About a year before the disaster, Tokyo Electric had 1.47 trillion yen of long-term loans from lenders including Sumitomo Mitsui, Mizuho and Dai-Ichi Life Insurance Co., according to the utility’s financial statement.
The 83-member Topix Banks Index (TPNBNK) of shares slid 1.2 percent at 1:12 p.m. in Tokyo, heading for the fifth straight decline, the longest losing streak since February.
“Megabanks and life insurers may have to shoulder the burden to rescue Tepco, though it’s uncertain how heavy that will be,” Takehito Yamanaka, an analyst at MF Global FXA Securities Co. in Tokyo. “Global investors may be more hesitant to buy those shares” or avoid Japan entirely, he said.
