TOKYO (AFX-ASIA) – Moody’s Investors Service said today it has assigned an “Aa1” long-term rating to the 30 billion yen of 10-year bonds issued by Tokyo Gas Co Ltd, and a “(P) Aa1” rating to a 150 billion yen shelf registration by the company. (US$1=110 yen).
“Aa1” is the second-highest of Moody’s investment-grade credit ratings. A shelf registration gives a company permission to sell a specified amount of debt within a stipulated period of time.
“The rating recognises Tokyo Gas’ prominent franchise; its effective control of the gas supply and distribution network in the greater Tokyo metropolitan area; and the stability of earnings from its distribution business,” Moody’s said in a statement.
It added the rating incorporates the implications of the liberaliszation of the Japanese gas market.
The Japanese government is gradually changing its traditionally protective policy toward the gas industry, and starting to relax controls through steadily expanding the size of the unregulated market, Moody’s noted.
The government is also encouraging competition to push down rates.
However, Moody’s said it does not foresee the emergence of any serious threat to Tokyo Gas’ strong franchise and the company should maintain its strong credit profile.
“Given the significant entry barriers to Japan’s gas market, Tokyo Gas has an effective monopoly to serve a substantial part of the greater Tokyo metropolitan area — Japan’s most important economic region,” the statement said.
“The company exercises commanding positions in terms of LNG bases, transmission, distribution and supply. Consequently, it plays a significant role in the national economy, meaning it is highly likely to receive strong regulatory and government support if, and when, required.”
Tokyo Gas is Japan’s largest gas company by sales.