Tokyo Gas Co., the nation’s biggest natural gas distributor, will sell the most bonds in a decade to help fund a ¥2.06 trillion spending plan and take advantage of coupons at an eight-year low.
Offerings this year will exceed ¥60 billion, or 50 percent more than it sold in 2011, Masaru Nishimura, the utility’s general manager of finance, said in an interview in Tokyo on Jan. 6. The amount will be the company’s largest debt issuance since 1999, according to data compiled by Bloomberg.
Tokyo Gas is expanding its investments in liquefied natural gas at a time when the March 11 earthquake-tsunami disaster and nuclear meltdown shut down atomic plants, making electric utility bonds unattractive to investors. The company last month sold 20-year bonds that pay 1.852 percent, the lowest coupons for similar maturity notes since June 2003, when it paid 1.01 percent. Hong Kong & China Gas Co.’s 15-year notes had a coupon of 3.625 percent.
“There is a lot of money looking to fill the void left by the withdrawal of utilities from the bond market, and Tokyo Gas has a good reputation among investors,” Mana Nakazora, chief credit analyst at BNP Paribas SA in Tokyo, said by telephone Friday. “There are no major concerns about the company’s fundamentals, which means it could command a somewhat favorable spread.”
Regional power generators retired ¥1.2 trillion of notes after a plant operated by Tokyo Electric Power Co. caused the worst radiation spill since the 1986 Chernobyl disaster, according to data compiled by Bloomberg. The companies issued only ¥25 billion in bonds in the period, leaving more money for utilities unaffected by the nuclear crisis.
The gas supplier for Japan’s most populated metropolitan area will mainly sell longer-term bonds maturing in 10 to 20 years, Nishimura said. The company prefers yen-denominated notes and will turn to banks such as Japan Bank for International Cooperation for foreign currency funding when investing overseas, he said.
Tokyo Gas in September sold ¥20 billion of 1.064 percent notes due 2021, the lowest coupon for 10-year bonds sold by the company since at least 1988, according to data compiled by Bloomberg. Korea Gas Corp. paid 4.04 percent on the same maturity debt issued last month.
The company has ¥157.7 billion of debt maturing in the next five year, starting with ¥20 billion of 1.35 percent bonds on June 20, according to data compiled by Bloomberg. Tokyo Gas, which reported ¥76 billion in cash and equivalents as of Sept. 30, plans to issue notes to refinance debt due this summer, Nishimura said.
Elsewhere in Japan’s credit markets, Bank of Tokyo-Mitsubishi UFJ Ltd. announced plans to sell uridashi bonds. The financier will offer 170 million Australian dollars ($175 million) worth of 4.91 percent four-year notes and $150 million of 1.82 percent five-year bonds, according to a filing with the Finance Ministry last week. Uridashi bonds are debt issued outside Japan for sale mainly to Japanese individual investors.