TEXT-S&P: Chubu Electric Power's Secured Straight Bonds Rated 'A'
(The following was released by the rating agency)
TOKYO (Standard & Poor's) Sept. 13, 2012--Standard & Poor's Ratings Services today assigned its 'A' long-term debt rating to Chubu Electric Power Co. Inc's (A/Negative/A-1) JPY20 billion, series 498, five-year domestic senior secured straight bonds, due Sept. 25, 2017. The coupon rate is 0.566%.
Chubu Electric is the third-largest power company in Japan in terms of electricity sales, providing about 15% of the nation's total electricity. The ratings on Chubu Electric reflect its strong business and customer base. The company has a monopolistic position in its supply area. It runs power generation, electricity transmission and distribution, and retail operations in a vertically integrated business model in the Chubu region. Its transparent pricing mechanism also supports its credit quality, in our view. However, as operator of the Hamaoka nuclear power plant, Chubu Electric continues to face increasing operational and financial risks due to the disaster at Tokyo Electric Power Co. Inc.'s (TEPCO; B+/Negative/B) Fukushima No. 1 nuclear power plant. We have incorporated our view that pressure on the ratings on Chubu Electric will continue because of a potential review of the existing favorable regulatory framework and worsening measures of financial performance.
The ratings on Chubu Electric reflect our opinion that there is a "moderate" likelihood of the government providing the company with timely and sufficient extraordinary support if it were to experience financial distress.
RELATED CRITERIA AND RESEARCH General Criteria: Principles Of Credit Ratings, Feb. 16, 2011 Rating Government-Related Entities: Methodology And Assumptions, Dec. 9, 2010 Corporate Ratings Criteria 2008, April 15, 2008
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