Tokyo Electric Power Co., manager of the meltdown-hit Fukushima No. 1 power plant, plans to issue corporate bonds for the first time in six years starting next April in an effort to raise ¥330 billion, sources close to the matter said Monday.
The beleaguered utility lost its bond-issuing ability after the triple core meltdown in March 2011 crippled its financial standing in the aftermath of the March 2011 Great East Japan Earthquake and tsunami. But cost-cutting efforts have improved earnings, prompting Tepco, as the utility is known, to consider a return to capital markets.
The plan coincides with Tepco's shift to a holding company system in April 2016 under which three subsidiaries will be formed to take over its retail, power generation and power transmission and distribution businesses.
The bonds will be issued by the power transmission and distribution unit, which is expected to be financially viable.
SMBC Nikko Securities Inc., Nomura Securities Co., Daiwa Securities Co. and Mitsubishi UFJ Morgan Stanley Securities Co. are among the several brokerages expected to become lead underwriters.
Tepco's earnings have been recovering amid the cost-cutting efforts, which include the postponement of plant refurbishment. It has also seen its fuel bills fall, partly thanks to the plunge in prices for crude oil and liquefied natural gas.
In the year ended this March, Tepco reported a group pretax profit of ¥208 billion, more than double the previous year.
Although it is unclear when its giant Kashiwazaki-Kariwa nuclear power plant will restart, it has stayed in the black for two consecutive years. The seven-reactor plant in Niigata Prefecture has a better chance of restarting than Tepco's other idled atomic plants.
Tepco included a bond issuance scenario for the next fiscal year in its business turnaround plan compiled in January 2014.
