030401

~~~~~((#))005003000r-Electricity

~~~~~((#))016010000p-Ratings & Rating Changes

Moody's rates Chubu's 30 billion yens bonds Aa2

LONDON: Moody's Investors Service has assigned a Aa2 rating to Chubu Electric Power Co, Inc.'s (Chubu) Yen 30 billion 0.82 percent bonds, due 2013, and has placed the rating under review for possible downgrade.

Chubu has an effective monopoly serving one of Japan's most important economic regions, the Chubu region.

The service area of Chubu has approximately 13 percent of Japan's population and 14 percent of the national GDP.

Chubu thus plays an important role in national economic and energy policy.

In the meantime, Moody's has been reviewing the ratings of the nine Japanese electric power companies including Chubu, due to concerns that the deregulation of Japan's electric power sector may increase uncertainty about its competitive structure in the medium to long term, and that the resulting competition may constrain each company's abilities to improve its financial positions in anticipation of an expected increase in their business risks.

The reform plan includes the gradual expansion of an unregulated market, abolition of the cumulative transmission charge system, establishment of the power market, etc.

It also allows for integration by the power companies of their generation, transmission and distribution operations.

Moody's will continue to assess how reform could affect each company's franchise and revenues, their potential for further cost reductions to maintain competitiveness, and the pace at which their financial positions will improve over the medium and long term, relative to the expected increase in their business risks.

Chubu Electric Power Co., Inc., headquartered in Nagoya, Japan, is the third-largest electric utility in Japan in terms of power generation, sales, and capitalisation.-Reuters