Standard & Poor's Corp. on Wednesday lowered credit ratings for Tokyo Electric Power Co., Chubu Electric Power Co. and Kansai Electric Power Co. due to their high debt burdens and increasing competition in the electricity market.
The major U.S. credit-rating agency said it downgraded its long-term ratings for Tokyo and Chubu to AA-minus from AA, and its rating based on public information for Kansai to AA-minus-pi from AA-pi.
It revised outlooks for the long-term ratings for Tokyo and Chubu to stable from negative, while reaffirming their A-minus-1-plus short-term ratings.
Given the downgradings, S&P's ratings on all nine Japanese electric power companies now stand at AA-minus.
The agency reaffirmed the ratings on six other power utilities -- AA-minus/stable/A-minus-1-plus for Shikoku Electric Power Co., AA-minus/stable for Chugoku Electric Power Co., and AA-minus-pi for Hokkaido Electric Power Co., Hokuriku Electric Power Co., Kyushu Electric Power Co. and Tohoku Electric Power Co.
The downgrading for Tokyo, Chubu and Kansai "reflects the challenges that will face Japan's electric power companies over the next several years in light of increasing competition stemming from partial deregulation . . . and continued downward pressure on electricity rates," S&P said.
Despite their efforts to reduce costs and restructure, the companies "have limited flexibility to deal with more challenging conditions in the future," given their "thin profit margins and very high debt usage" amid downward pressure on rates and Japan's weak economic growth prospects, the agency said.