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Power companies plan big bond issues as Japan restarts reactors

Low-interest funds will finance safety measures at nuclear plants

Kanasai Electric plans to upgrade safety measures at the Mihama nuclear power plant.

TOKYO -- Japan's 10 big regional electricity providers are expected to float around 1.7 trillion yen ($15.4 billion) in bonds this fiscal year, the most in a decade, to finance new safety measures needed to restart shuttered nuclear plants.

The total, compiled from capital plans and Nikkei estimates, is 17% more than what was issued in the year ended March 2018. It also exceeds the roughly 1.46 trillion yen in bonds coming due this fiscal year.

Much of the money will fund nuclear power operations. Kansai Electric Power, which serves the greater Osaka area, plans to take in up to 350 billion yen for safety upgrades at its Takahama and Mihama nuclear plants, both in Fukui Prefecture. The money will also go toward the redemption of outstanding debt.

While two reactors at Takahama resumed operation last year under strengthened safety standards put in place earlier this decade, other reactors still require upgrades to receive clearance for restarts.

Hokuriku Electric Power, serving northwest Japan, will pay for safety upgrades at its Shika plant in Ishikawa Prefecture and construction at its largest fossil-fuel plant. Tohoku Electric Power, in the northeast, is expected to make safety upgrades at two nuclear stations.

Tokyo Electric Power Co. Holdings expects to float 450 billion yen in bonds, the most in a decade. These will fund investments in transmission and transformer equipment, as well as help repay outstanding debts.

Conditions are ripe for corporate bond issues in a Japan where interest rates are historically low. "Investor appetite is growing for utilities' bonds, which offer higher yields than government securities," said Yasunobu Katsuki of Mizuho Securities.

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