The nation’s major banks are considering extending loans worth up to ¥2 trillion to Tokyo Electric Power Co. as early as the end of the month, sources said Wednesday.
The move is aimed at helping Tepco raise funds for measures to boost its electricity supply amid the crisis at the Fukushima No. 1 nuclear power plant.
Sumitomo Mitsui Banking Corp. is expected to provide loans of about ¥600 billion, Mizuho Corporate Bank some ¥500 billion and Bank of Tokyo-Mitsubishi UFJ about ¥300 billion, the sources said.
In addition, Mitsubishi UFJ Trust and Banking Corp., Sumitomo Trust & Banking Co., Chuo Mitsui Trust and Banking Co. and Shinkin Central Bank are considering extending loans, the sources said, as Tepco is likely to have requested loans from each of them last week.
The utility had procured funds mostly through issuing corporate bonds, but it has apparently decided to ask banks for loans because conditions for issuing corporate bonds have become severe following the nuclear accident.
Rating agencies Moody’s Japan K.K. and Standard & Poor’s downgraded their long-term credit ratings for Tepco with the utility’s financial heath expected to worsen due to the crisis following the devastating March 11 earthquake and tsunami.
Tepco plans to repair its thermal power plants damaged by the March 11 quake to make up the electricity shortage. It will likely cost the company a lot of money to purchase heavy oil and other materials used to generate electricity.
Meanwhile, the government has started considering whether it is possible for the Development Bank of Japan to extend loans to Tepco under a program that involves providing loans in the event of wide-scale disasters using funds procured by the government, sources said.
The government set aside about ¥3.3 trillion in fiscal 2010 for the scheme and is considering increasing the amount for fiscal 2011, which starts April 1.
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