Tokyo Electric Power Co. Holdings Inc.

The stable outlook reflects our view that: The Tepco Holdings group has stabilized its self-financing capability through its growing record of public bond offerings; and Its profits and cash flows are unlikely to deteriorate substantially in the next year or two. We could consider upgrading Tepco Holdings if we determine that its profits and cash flows were going to stabilize with an increased likelihood of any of the following: The stability of its electricity supply and profit levels improve as at least one of the Kashiwazaki-Kariwa nuclear reactors is restarted; The group's profitability improves substantially through increased dividends from Jera Co. Inc., a joint venture set up with Chubu Electric Power Co. Inc. in 2015; or Stability in earnings, financing

...Tokyo Electric Power Company Holdings Inc.'s (Tepco Holdings) earnings will likely remain under pressure, given the impact of the COVID-19 pandemic, intensifying competition, and a lower likelihood of a swift restart at the Kashiwazaki-Kariwa nuclear plant. The Tepco Holdings group's electricity sales volume dropped 9.8% year on year in the third quarter of fiscal 2020 (Oct. 1, 2020, to Dec. 31 2020). S&P Global Ratings expects the figure to continue declining over the coming year or two. We believe the company will likely continue losing electricity contracts amid fierce competition, even though the pandemic could gradually subside. Costs associated with safety measures at its Kashiwazaki-Kariwa nuclear reactors and costs related to the situation in Fukushima continue to weigh on the group's earnings, in our opinion. Despite the pressure on earnings, the group's profitability is unlikely to fall substantially in the next one or two years. The group maintains a near monopoly over greater...

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