Tokyo Electric Power (Tepco) is gauging demand for its first bond offering since the 2011 Fukushima nuclear calamity, with some market participants expecting a sale as early as February, people familiar with the plans said. Once-sceptical investors are now more comfortable with the utility's outlook after government moves to reassess decommissioning and compensation costs, bankers and investors who asked not to be identified told Thomson Reuters DealWatch.

Tepco is likely to have to pay investors a 1 percentage point premium above Japanese government bonds, considered a rich yield pick-up, as potential buyers see an implicit government guarantee for the basically nationalized company, the people said. That's about three times more yield pick-up than on other electric utility bonds, they said. While the sale's size has not been decided, potential maturities are three-, five- and 10-years, the people said.

The company was in discussions last year with investors to sell as much as 330 billion yen ($2.8 billion) of bonds. A Tepco spokesman said the company plans to issue bonds by the end of March but declined to comment on specific target dates or sizes. The timing could be pushed back as the Japanese government wants Tepco to delay the bond sale until after April, when legal changes that let it give more financial support to the utility are enacted, said a person familiar with the government's thinking.

Copyright Reuters, 2017