Bloomberg News

Kansai Electric Plans First Bond Since Quake as Nuclear Restarts

July 05, 2012

Kansai Electric Power Co. (9503) is planning to sell its first bonds since December 2010, as the utility today became the only Japanese company to re-start a nuclear reactor since the Fukushima disaster last year.

Kansai Electric, Japan’s second-biggest generator, hired Mizuho Financial Group Inc. and Mitsubishi UFJ Morgan Stanley Securities Co. for a sale of five-year notes planned for this month, according to a faxed statement from Mizuho today. The company resumed electricity generation and transmission at its Ohi No. 3 nuclear reactor in central Japan today.

The utility is set to follow Tohoku Electric Power Co. in returning to the bond market after offerings by nuclear operators dried up following the worst atomic accident since Chernobyl. Issuance by Japan’s power companies plunged 92 percent last year to 95 billion yen ($1.19 billion), and was 125 billion yen this year, according to data compiled by Bloomberg.

“The restart of the Ohi reactor is a huge step forward in being able to predict income and expenditure for the industry,” Takao Matsuzaka, a credit analyst at Daiwa Securities Co., said in a telephone interview from Tokyo today. “The other power companies will also resume bond sales after the summer.”

Kansai Electric ended a two-month period when all the country’s 50 reactors were off-line for safety checks following the earthquake and tsunami in March 2011.

The utilities powering the world’s third-biggest economy have been forced to use coal, oil and gas-fired plants to keep factories, offices and homes supplied with electricity. Buying and importing those fuels is driving up costs, potentially leading to higher bills and further weakening the economy.

Bond Demand

Kansai raised 30 billion yen from a sale of 10-year, 1.285 percent bonds in December 2010. The notes were priced to yield 9 basis points more than similar-maturity government debt, according to data compiled by Bloomberg. The spread widened to as much as 60.5 basis points June 11, and was quoted at 59.5 yesterday, according to Japan Securities Dealers Association prices on Bloomberg.

“After checking the issuance environment, we understand there is demand for our bonds,” Kansai Electric spokesman Akihiro Aoike said in a telephone interview from Osaka today. Aoike declined to elaborate on the details of the plan.

Kansai Electric postponed a sale of 10-year bonds in June 2011 due to market conditions, according to an e-mailed statement then from Nomura Securities Co., which was arranging the offering with Daiwa, Mitsubishi UFJ Morgan Stanley, Mizuho and SMBC Nikko Securities Inc.

The utility has 80 billion yen of bonds due this year, and 220 billion yen in 2013, according to data compiled by Bloomberg.

To contact the reporters on this story: Yusuke Miyazawa in Tokyo at ymiyazawa3@bloomberg.net; Taku Kato in Tokyo at tkato6@bloomberg.net

To contact the editor responsible for this story: Shelley Smith at ssmith118@bloomberg.net


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