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Nuclear Test for Abe as Quake Risk Doubles Spread: Japan Credit via Bloomberg

Shinzo Abe’s support for nuclear energy is being tested during his party’s first week back in power after utilities’ borrowing costs surged amid probes into whether atomic facilities sit on active earthquake fault lines.The extra yield investors demand to own Japan Atomic Power Co.’s 1.422 percent notes due December 2019 over government debt jumped 500 basis points to a record 900 basis points last week, according to JS Price. Regulators earlier this month said its Tsuruga plant may be sitting on an active fault. The spread on similar-maturity 1.405 percent notes sold by Kansai Electric Power Co., the second-biggest stakeholder in Japan Atomic, climbed 35 to 175 basis points, reaching the highest ever on Dec. 13, the data show.

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Nuclear Decision

The LDP said in its election pledges that it will make a decision on whether to restart all of Japan’s nuclear reactors within three years. It also vowed to decide the country’s best energy mix within 10 years. The Democratic Party of Japan, which was defeated over the weekend, and smaller opposition parties are calling for the phasing out of nuclear power.

“The LDP has been seen as very interested in restarting the country’s reactors, which is a positive for the nuclear industry and has already been reflected in the pricing,” Taketoshi Tsuchiya, Tokyo-based director of credit trading at Barclays Plc. “There isn’t much action from overseas investors, since they are already in holiday-mode. The credit markets are reacting very calmly to the news.”

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