TEXT-S&P Chubu Electric's Bond Shelf Assigned 'A' Preliminary Rtg
(The following statement was released by the rating agency)
Oct 02 - Standard & Poor's Ratings Services today assigned its 'A' preliminary debt rating to Chubu Electric Power Co. Inc.'s (A/Negative/A-1) JPY500 billion domestic bond shelf registration, effective for two years until Oct. 1, 2014.
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: Rating Government-Related Entities: Methodology And Assumptions, Dec. 9, 2010
2008 Corporate Criteria: Analytical Methodology, April 15, 2008