Standard & Poor's downgraded the long-term rating on Tokyo Electric Power Co (TEPCO), operator of a nuclear plant at the centre of the world's worst atomic crisis for 25 years, to 'BBB+' from 'A+.' The agency also lowered the short-term rating to 'A-2' from 'A-1', with both ratings remaining "on CreditWatch with negative implications", it said, suggesting that they could be downgraded further.
Standard & Poor's decision, announced in a statement released Saturday Tokyo time, followed a similar move by ratings agency Moody's. The deadly earthquake and tsunami on March 11 damaged several TEPCO facilities, and the company now faces huge costs from the crisis at the Fukushima Daiichi nuclear plant, which continues to leak radiation.
The nuclear disaster has forced evacuation of nearby residents and contaminated farm soils, food products and livestock. "As a result of the unprecedented events of March 11 and the importance of TEPCO to the Japanese economy, we believe that the Japanese government may provide some form of extraordinary support to the company," S&P said.
"However, on a stand-alone basis, we view the credit profile of TEPCO as non-investment grade, with a continued high risk of negative rating transition in the short term," it said. Some analysts estimate TEPCO could face compensation claims of more than 10 trillion yen (120 billion dollars).
On Wednesday TEPCO said it had secured two trillion yen in bank loans but warned this would not be enough to keep the company running amid concerns it will be unable to cope under the financial strain of the crisis. Chairman Tsunehisa Katsumata told a press conference that "unknown" factors clouded the beleaguered firm's outlook, but stressed the company aimed to remain out of state hands.
Local media have reported that the government has decided to inject tax money to support TEPCO and ensure the company stays afloat to secure stable power supply, but has no immediate plan to nationalise the firm. Investors have sent TEPCO shares to near 50-year lows amid rapidly fading confidence in the firm's ability to manage Japan's worst ever nuclear accident.
Close to 80 percent of the company's market value has been wiped off since March 11. One of the world's biggest power companies, TEPCO boasts 44.6 million customers - more than one third of the population of Japan - in the Kanto region of the main island of Honshu, including Tokyo.
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