Head of bankers' association denies TEPCO debt write-off+

TOKYO, May 19 Kyodo -
The head of Japan's bankers' organization said Thursday that the creditor banks of Tokyo Electric Power Co. do not intend to write off their debts to the embattled utility, apparently turning a deaf ear to the government, which has urged the lenders to do their utmost to help TEPCO before it seeks state support.
Moody's Japan K.K. said the same day the credit rating agency could further downgrade its rating for the utility to junk bond status if commercial banks give up their claims on loans to the operator of the tsunami-devastated Fukushima Daiichi nuclear power plant.
''We're not considering either forgiving debt or lowering interest rates'' on the loans to TEPCO, Japanese Bankers' Association Chairman Masayuki Oku told reporters. But he also suggested banks would consider allowing the firm to refinancing loans at lower interest rates if it hopes and they judge such a measure is necessary to ensure its financial soundness.
The comments by Oku, who also heads Sumitomo Mitsui Financial Group Inc., came after the government's top spokesman, Yukio Edano, indicated last week that creditor banks forgiving debt could possibly be a precondition for the state to implement its financial support measures for Tokyo Electric, which faces a huge amount of compensation claims following the disaster.
A Moody's Japan official said the agency could also reconsider its rating for TEPCO if a framework for the government's support for the utility fails to be enacted during the current Diet session, scheduled to end June 22.
The Japanese unit of U.S. agency Moody's Investors Service Inc. lowered the rating by two notches to Baa3, just above junk status, on Monday as the nuclear crisis could inflict larger-than-expected damage on the company.
Also Thursday, the bankers' association called on the government to address the problem of ''dual loans'' as there are many individuals and companies being forced to newly borrow from banks as a result of the disaster in addition to their existing loans.
Filing a set of requests with the government and Prime Minister Naoto Kan's Democratic Party of Japan, the association specifically urged them to bail out individuals and smaller firms with such debt burdens by purchasing their residential and commercial properties damaged by the quake and tsunami as well as by buying debts from the companies through state-backed entities.