Tokyo Electric shares hit record low; delays results release - Reuters

* Stock falls as much as 18 pct to lowest on record

* Tokyo Electric to begin paying compensation-media

* Company delays financial results as it assesses damage (Edits, fixes formatting)

By Tim Kelly and David Dolan

TOKYO, April 5 (Reuters) - Shares of Tokyo Electric Power tumbled as much as 18 percent to a record low on Tuesday amid growing investor concern about the financial burden of dealing with a tsunami-hit nuclear plant leaking radiation.

The Yomiuri newspaper reported that Tokyo Electric, or TEPCO, would begin paying compensation to those who were forced to evacuate their homes or suffered other losses, even before damages from the accident have been assessed.

The company said in a statement nothing had been decided about the payment of compensation claims. The report was enough to rattle jittery investors, however.

Last week, Bank of America-Merrill Lynch estimated that TEPCO could face compensation claims topping $130 billion if Japan's worst nuclear crisis dragged on. [ID:nL3E7EV039]

TEPCO also said it would delay the release of its financial results from the originally planned date of April 28 as it assesses damage from the March 11 earthquake and tsunami, which knocked out about one-fifth of its power-generating capacity.

Shares of Tokyo Electric fell as low as 363 yen in afternoon trade, down 18 percent and lower than the previous lifetime low of 393 yen hit in December 1951, according to Thomson Reuters data. Shares were down 17.4 percent at 364 yen as of 0514 GMT.

"If we think about all the people and businesses affected by the accident, and the compensation that would have to be paid, there's no way shareholders could be fully protected," said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

TEPCO shares are down more than 80 percent since the devastating earthquake and tsunami on March 11, and investors are increasingly concerned the government may be too slow in bailing out the utility, including possible nationalisation.

TEPCO has already been paying so-called "condolence money", which in Japan is considered separate from compensation, to give immediate aid to who were affected by the plant, such as evacuees.RATINGS DOWNGRADE

The once-stellar credit status of Japan's biggest power utility has been hit by the Fukushima crisis. Standard & Poor's on Friday cut its long-term rating on TEPCO by three notches, to BBB+ from A+. [ID:nWNA5195]

The news of compensation payments would be a further negative for the company, unless the government were to pick up some of the tab, said S&P analyst Hiroki Shibata.

"We don't know how much (compensation) is, but if the amount is significantly large we may have to take that into account in our financial projections," he told Reuters.

S&P's current rating assumes the government will pay for at least some of the compensation claims against the utility and that major banks will continue to financially support the utility, Shibata said.

If S&P were to cut its ratings by another three notches, TEPCO's debt would no longer be considered investment grade, meaning some institutional investors would be forced to dump its bonds.

The company currently has 5.06 trillion yen ($60.2 billion) in outstanding debt, with the overwhelming majority of that in bonds and the rest in secured notes, according to Thomson Reuters data.

"If it is downgraded to junk, pension funds and other investors with similar investment guidelines would be forced to sell," said Koichi Ogawa, chief portfolio manager of Daiwa SB Investments

"If TEPCO were to default on its debt that would be a worry to the financial system, so I don't think that's going to happen. It's being backed up by the Bank of Japan and the major banks."

Credit default swaps, or contracts insuring TEPCO's five-year debt against default, were trading at as much as 402.5 basis points, according to data provider Markit. The cost of insuring its debt rose to a record 475 basis points last week.

That compared to 78.3 basis points for Toyota's debt and 81 basis points for Sony's debt.

"It's almost entirely speculative money that's moving into Tokyo Electric's stocks, bonds and CDS right now," said Tetsuro Ii, chief executive officer of Commons Asset Management.

"They are trading on the various pieces of news that come out and I think that moves on speculation are likely to continue for some time until there is some firm talk or something specific is determined." ($1 = 84.040 Japanese Yen) (Additional reporting by James Topham, Antoni Slodkowski and Chikafumi Hodo; Editing by Joseph Radford and Muralikumar Anantharaman)

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