Japanese banks' credit ratings will be at risk if they forgive loans made to Tokyo Electric Power Co., Standard & Poor's said.
In a worst-case scenario, debt waivers combined with the deterioration of other loans because of March 11 could negatively affect the ratings on some banks, S&P said in a statement Thursday.
S&P this week downgraded Tepco's credit ratings to junk status on the risk that banks may restructure some of its debts. Government officials last month urged creditors to assist the utility after Prime Minister Naoto Kan's administration outlined a support plan that is aimed at helping it compensate victims of Tepco's Fukushima No. 1 nuclear plant accident.
Under a "less-stressed" scenario, in which lenders reduce interest rates on existing loans to Tokyo Electric, "credit costs and the immediate impact on the banks' profitability would be manageable," S&P said. Banks would still have to classify loans as restructured according to current regulations.
Moody's Investors Service said last month it may cut the debt ratings of lenders to Tepco if they waive loans made before the March 11 disaster triggered the nuclear crisis. Banks' debt ratings were also put on review for possible downgrade by Moody's Wednesday because deteriorating public finances may make it harder for the government to help lenders in times of financial trouble.