Credit-default swaps on Tokyo Electric Power Co. are trading at a three-week high after the government's chief spokesman said public pressure may force lenders to write off loans to the troubled utility.
Contracts protecting Tepco debt from default jumped 145.4 basis points to 357.8 basis points Friday, the biggest increase since March 15 and the highest since April 19, CMA prices show. Swaps on U.S. utilities average 145.7 basis points, according to data provider CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market.
Chief Cabinet Secretary Yukio Edano told reporters Friday that "people won't support" using taxpayer funds for Tepco unless its banks forgo some loans made before the March 11 earthquake and tsunami crippled its Fukushima No. 1 nuclear power plant. The government has already agreed to provide financial aid to protect the utility from bankruptcy.