S&P upgrades Tepco to BB

S&P said it raised the long-term corporate credit ratings on Tokyo Electric Power Co. Holdings Inc. (Tepco) one notch to BB from BB-.

The agency also said it affirmed the BB+ long-term senior secured debt ratings and B short-term ratings on the company.

The outlook is stable.

The upgrade reflects a view that Tepco has meaningfully reduced downside risk in its profit and is likely to maintain solid profitability over the next year, S&P said.

The company also is expected to continue ongoing cost reductions, which will underpin its earnings performance, the agency said.

Tepco’s profits have stabilized thanks to a hike in electricity rates in 2012, sizable cost reductions and significantly lower fuel costs, S&P explained.

Along with stabilized profitability and operating cash flow, Tepco’s cash flow and leverage ratios have improved in recent years thanks to a hike in electricity rates in 2012, the agency added.

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