Rating agency Standard and Poor’s yesterday downgraded Tepco, the operator of Japan’s stricken Fukushima nuclear plant, in light of the company’s worsening credit profile.

S&P said in a statement that it lowered Tokyo Electric Power Co.’s long-term corporate credit rating to B+ from BBB and its short-term corporate credit rating to B from A-2.

It said the move was made “reflecting our view that there is an increasing likelihood that lender banks could undertake some form of restructuring of Tepco’s borrowings, in light of Tepco’s worsening stand-alone credit profile”.

Earlier this month the troubled utility revealed the biggest-ever loss for a Japanese firm outside the financial sector after being hit by huge costs as a result of the worst nuclear crisis since Chernobyl.

The firm posted an annual net loss of $15 billion and said its President Masataka Shimizu would step down over the crisis at its crippled Fukushima Daiichi nuclear plant. The company had said the “significant deterioration” in its financial position “raises substantial doubt about its ability to continue as a going concern” but that it would adhere to the government’s order to restructure in return for assistance.

The utility said it had decided to scrap reactors at the plant after the March 11 earthquake, and abandoned plans to build two more.

The Fukushima plant, sitting on the northeastern coast facing the Pacific, was crippled by the March earthquake and tsunami and has spewed radiation in the world’s worst nuclear crisis since Chernobyl 25 years ago.

The power company faces compensation payments worth tens of billions of dollars for victims of the atomic crisis.

Tepco and the government have yet to release estimates for the payout bill, but analysts say it could range from four to 10 trillion yen depending on how long the nuclear crisis lasts.

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