Japan's cabinet approved a draft law to help Tokyo Electric Power pay billions of dollars in compensation to its radiation refugees, kicking off lawmaker wrangling that may take weeks to decide the fate of Asia's largest utility. The approval is a step forward in a slow process that has frustrated the victims of radiation leaks at Tokyo Electric's nuclear plant in Fukushima, and drove up shares in the company by 25 percent on Tuesday.
However, opponents of the bill from both sides of a divided parliament may now trip up the proposed law or demand amendments in return for support, leaving Tokyo Electric's fate uncertain. Holders and analysts of the company's $110 billion in debt remain wary.
"It has not been made into a law yet. So, it's too early to take a sigh of relief," said Akihito Murata, credit analyst at Deutsche Securities. Tokyo Electric's five-year CDS spreads were bid at 1,000 basis points Tuesday, unchanged from Monday, meaning it costs $1 million to insure $10 million of Tokyo Electric's debt.
Tokyo Electric's shares, which have fallen 88 percent since the March 11 quake, have been volatile as investors jumped in and out of the stock. On June 7, the shares dropped 28 percent before rebounding. Tokyo Electric, also known as Tepco, said: "We hope that the proposed bill will be enacted in parliament as soon as possible." The company said it was ready to make fair and speedy compensation payouts once lawmakers gave the green light.
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