TEXT-S&P: J-Power's Unsecured Straight Bonds Rated 'A'

Tue Oct 16, 2012 2:17am EDT

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(The following was released by the rating agency)

TOKYO (Standard & Poor's) Oct. 16, 2012--Standard & Poor's Ratings Services today assigned its 'A' long-term debt rating to Electric Power Development Co. Ltd.'s (J-Power; A/Negative/--) JPY20 billion series 35 10-year domestic senior unsecured straight bonds, due Oct. 20, 2022. The coupon rate is 1.126%.

J-Power is Japan's largest wholesale power provider, supplying electricity to Japan's 10 major electric power companies (EPCOs). J-Power provides electricity generated at its hydroelectric and thermal power plants, through a nationwide network of transmission trunk lines that link most regions of Japan. The company plays an extremely important role in maintaining a stable electricity supply network throughout the country.

Our ratings on J-Power reflect its crucial position in Japan's electric power supply system. The company maintains stable earnings and cash flow, underpinned by a guaranteed contract to sell electricity to Japan's 10 EPCOs as well as high price competitiveness in wholesale electricity. We see low risk related to J-Power's overseas electricity business and its stable financing as strengths for the ratings. On the other hand, we believe J-Power's business depends on Japan's electric power companies (EPCOs) because it is a leading wholesale supplier of electricity to these companies on long-term, guaranteed contracts and it has a crucial role in maintaining a nationwide network of key transmission facilities. Accordingly, because measures of these EPCOs' financial performance have deteriorated, we take the view that the EPCOs' worsening credit quality will continue to affect J-Power's credit quality. We also take the view that J-Power's growing debt constrains its current ratings.

Our ratings on J-Power reflect our opinion that there is a "moderate" likelihood of the government providing the company with timely and sufficient extraordinary support were it to experience financial distress.

RELATED CRITERIA AND RESEARCH

Rating Government-Related Entities: Methodology And Assumptions, Dec. 9, 2010 2008 Corporate Criteria: Analytical Methodology, April 15, 2008

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