Tokyo Utilities and Banks Fall on Tepco Debt Plan

Nigel Thomas
17 May, 2011
New York City

Stocks in Tokyo were flat but banks and utilities declined for the third day in a row. Finance Minister Yoshihiko Noda sent a clear signal to the market and urged creditors to work with Tepco to lower debt and facilitate the compensation to victims.

[R]5:00 PM Tokyo – Stocks in Tokyo were flat but banks and utilities declined for the third day in a row. Finance Minister Yoshihiko Noda sent a clear signal to the market and urged creditors to work with Tepco to lower debt and facilitate the compensation to victims.[/R]

The Nikkei 225 Stock Average increased 0.1% to 9,567.02 and the broader Topix index declined 0.1% to 828.85.

The benchmark index is down 8% since the earthquake struck on March 11 however Asian markets have increased between 4% and 6%.

Ten year bonds on Japanese government edged lower to 1.14% yield and the yen traded in a tight range between 80.79 and 81.04 to a dollar and at 114.5 to a euro.

Stock Movers

Utilities and banks led the decline in Tokyo trading.

Tokyo Electric or Tepco plunged 9.5% to 380 yen after Moody’s lowered senior secured debt rating to Baa2 from Baa1.

As usual rating agency lagged market perception and action of rating are increasingly overlook by the market. Moody’s also lower short-term commercial paper to Not Prime from Prime 2.

The government is debating if Tepco should separate its power generation business from the distribution business and enter in a direct negotiation with its creditors to lower its debt.

Chubu Electric Power declined 5.5% to 1,339 yen, Kansai Electric fell 3.7% to 1,452 yen and Tohoku Electric Power fell 1%.

Banks declined for the third day after Finance Minister Yoshihiko Noda said today in Tokyo that the government is seeking cooperation from banks and creditors to tackle the damage at a plant controlled by Tepco.

Sumitomo Mitsui declined 0.8% to 2,381 yen and Mizuho Financial Group declined 1.6%.

Index changes also affected several companies after MSCI said it will remove 20 companies from its MSCI Global Standard Indices including MSCI Japan Index on May 31.

On the changes in the index, Sapporo Holdings declined 3.3% to 297 yen and Mitsui Mining & Smelting Co fell 3.6% to 270 yen and Canon Marketing fell 1.5% to 846 yen.

The weakness in the yen lifted the electronics maker. Canon Inc increased 0.3% to 3,725 yen and Sony gained 1.5% to 2275 yen.