Japan’s Utilities Seek Record Loans as Fuel Costs Rise

Japan’s top five electric utilities, shut out of the bond market following the Fukushima nuclear disaster, are borrowing a record 4 trillion yen $52 billion in loans at a premium to pay for the surging cost of fuel.Tohoku Electric Power Co., based in the tsunami-damaged northeast, will pay 1.4 percent interest on the 50 billion yen, 15-year loan it clinched on Sept. 30, or a 45.5 basis points spread over the similar-maturity government notes, according to Bloomberg calculations based on company data. Borrowing at that rate, the Japanese utilities would pay an extra 2.6 billion yen in loan interest this fiscal year than they would selling bonds, the calculations show.Tokyo Electric Power Co., Japan’s largest utility, and its peers are facing lower profit margins as the shutdown of Japan’s atomic plants after the world’s worst accident since Chernobyl has forced the utilities to burn more natural gas and coal to meet demand. The companies are scrambling for alternative sources of financing to replace a net 1.25 trillion yen worth of bonds retired since the March 11 earthquake and tsunami caused uncertainty over the future of atomic energy in the country.

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